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Amdocs Ltd. (DOX - Analyst Report) reported mixed financial results for the fourth quarter of fiscal 2013. The company completed the acquisition of Actix on Sep 2013 and decided to acquire Celcite Management Solutions for approximately $129 million in cash. Celcite is a leading provider of network management and self optimizing network solutions. The deal is expected to close by the early second quarter of fiscal 2014.

Further, management has decided to raise its quarterly dividend per share from 13 cents to 15.5 cents payable on Apr 17, 2014, subject to shareholders’ approval.

Fourth-Quarter Results in Details

Quarterly net income, on a GAAP basis, was $89 million or 54 cents per share compared with $98 million or 60 cents per share in the prior-year quarter. Fourth-quarter fiscal 2013 adjusted earnings per share of 59 cents were exactly in line with the Zacks Consensus Estimate. Quarterly total revenue came in at $845.2 million, up 2.8% year over year, but narrowly missed the Zacks Consensus Estimate of $847 million.  

Amdocs posted gross margin of 35.4% in the reported quarter compared with 35.6% in the year-ago quarter. Reported operating income was approximately $122.9 million, up 8.3% year over year. Quarterly operating margin was 14.5% compared with 13.8% in the prior-year quarter. At the end of fiscal 2013, total order backlog was $2,870 million against $2,790 million at the end of the year-ago quarter. In the reported quarter, Amdocs repurchased shares worth $97 million.

During fiscal 2013, Amdocs generated around $670.5 million in cash from operations compared with $514.1 million in the comparable prior-year period. Free cash flow in fiscal 2013 stood at $563.8 million against $392 million in fiscal 2012. At the end of fiscal 2013, Amdocs had approximately $1,326.4 million in cash and marketable securities compared with $1,118.2 million at the end of fiscal 2012. Short-term loan was $200 million, remaining same year over year.

Segment Wise Results

Service revenues were $822.7 million, up 3.1% year over year. License revenues were approximately $22.2 million, down 7.5% year over year. Technologically, Customer Experience Systems revenues were $809.3 million, up 3.3% from the year-earlier quarter while Directory revenues were $35.9 million, down 8% year over year. The company’s core Managed Services revenues came in at $414 million, down 2.3% from the prior-year quarter.

Geographically, North America generated $608.9 million, up 6.8% year over year. Europe generated $101.9 million, down 9.9% year over year, while the Rest of the World contributed the remaining $134.4 million, down 3% year over year. Revenues from the emerging markets came in at $113.8 million, up 13.9% year over year.

Financial Outlook

Management expects revenues in the range of $845–$875 million in the first quarter of fiscal 2014. Earnings per share, on a GAAP basis, are expected between 58 cents and 66 cents. Moreover, non-GAAP earnings per share, including 6–7 cents per share of equity-based compensation expense, are projected in the range of 66–71 cents.  

For fiscal 2014, total revenue is expected to grow 4%-6% year over year. Non-GAAP earnings per share are expected to grow 6%-9% year over year.

Other Stocks to Consider

Amdocs currently has a Zacks Rank #3 (Hold). Other stocks in the same industry which are performing well include CoStar Group Inc. (CSGP - Snapshot Report), EPAM Systems Inc. (EPAM - Snapshot Report) and Infosys Ltd. (INFY - Analyst Report). All three stocks currently have a Zacks Rank #2 (Buy).

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