UPDATE 2-Higher European demand boosts Cognizant revenue (May 8)

Reuters

(Corrects last paragraph to say Cognizant is one of the topapplicants for green cards in the United States, not India)

* First-quarter profit $0.93/share, in line with estimate

* First-quarter revenue $2.02 bln vs estimate of $2.01 bln

* Sees second-quarter revenue at least $2.13 bln vs est$2.11 bln

* Shares up as much as 6 pct

May 8 (Reuters) - Cognizant Technology Solutions Corp forecast current-quarter revenue above marketexpectations after an 18 percent rise in the first quarter,helped by strong demand from Europe.

The IT service provider is also benefiting from an increasein demand from its global banking customers, who have stepped upspending to comply with stricter regulations.

"We are now three quarters into pretty good growth in thebanking sector, and we expect to continue to see that growththroughout the year," Chief Financial Officer Karen McLoughlintold Reuters.

Financial services contributed 40 percent to the company'ssales in 2012, with more than half of that coming from thebanking industry.

Cognizant shares rose 6 percent but eased a little to tradeup 4.5 percent at $67.80.

First-quarter sales from Europe rose 23 percent, outpacing a16 percent growth in North America. Europe accounts for nearly afifth of Cognizant's revenue.

Instability in Europe has forced companies in the region tooutsource and cut costs. But Cognizant, which operates on lowermargins than its rivals, has been able to win a larger share ofthe business.

Chief Financial Officer Karen McLoughlin said the companycontinued to be "really bullish on long-term opportunities" inEurope.

"As we look across our business, while there continues to bepockets of weakness, we are encouraged that the majority of ourbusinesses are experiencing positive demand and growthcharacteristics," Chief Executive Francisco D'Souza said on aconference call with analysts.

Analysts said the company's focus on the financial servicesand health care businesses allows it to differentiate itselffrom other in the industry.

Indian rivals such as Tata Consultancy Services,Infosys Ltd and Wipro Ltd reported mixedresults for the first quarter, highlighting a shaky recovery inclient demand.

Cognizant, which was founded in 1994 as a captive unit ofDun & Brad Street in India, forecast revenue of at least$2.13 billion for the second quarter.

Analysts on average were expecting revenue of $2.11 billion,according to Thomson Reuters I/B/E/S.

Cognizant forecast earnings of 97 cents per share, in linewith analysts' estimates.

First-quarter net income rose 18 percent to $284.2 million,or 93 cents per share. Revenue rose to $2.02 billion from $1.71billion.

Analysts on average had expected earnings of 93 cents pershare on revenue of $2.01 billion.

VISA SNAG

Shares of IT services companies took a hit last month onnews that the U.S. Senate Judiciary Committee was debating adraft immigration bill that could hurt Indian outsourcing firms'businesses in the United States. (http://link.reuters.com/fug67t)

The proposals, which include a sharp cut in the number offoreign workers who can be sent to the United States bycompanies such as Infosys and TCS, have won support from rivalU.S. firms including IBM and Accenture.

"Although the recently introduced bill includes someimportant fixes to the green card process, there are also someclauses that would be detrimental to Cognizant," PresidentGordon Coburn said on a conference call with analysts.

"These clauses include higher fees on visas, a requirementto pay above market salaries to visa holders, potentialrestrictions on access to visas, and constraints on the abilityto have visa holders serve our clients."

Cognizant is one of the top applicants for green cards inthe United States and analysts have estimated that about 65percent of Cognizant's employees in the United States work onH-1B or L-1 visas, or work permits. (Reporting by Sayantani Ghosh and Sruthi Ramakrishnan inBangalore; Editing by Supriya Kurane and Joyjeet Das)

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