January 29, 2009 / 9:33 PM / 10 years ago

UPDATE 2-ACS quarterly earnings beat Street, gives mixed outlook

* Q2 earnings of 85 cents beat estimates

* Q2 revenue narrowly misses expectations

* Cuts lower end of FY 09 outlook

* FY 09 earnings outlook beats estimates (Adds details from conference call)

Jan 29 (Reuters) - Technology outsourcing company Affiliated Computer Services Inc (ACS.N) posted a quarterly profit that beat market estimates on strong revenue growth at both its key segments and expects third-quarter revenue to rise 7 percent to 8 percent.

The company cut the lower end of its fiscal 2009 revenue outlook by 1 percentage point. It now expects internal revenue growth of 5 percent to 6 percent. [ID:nWNAB5998]

Its earnings forecast of $3.70 to $3.75 a share for the year was ahead of the comsensus estimates of $3.69 a share.

For the third quarter, it forecast earnings of 92 cents to 95 cents a share, while analysts were looking for 93 cents a share.

In the second quarter, its commercial segment grew 7 percent, contributing 60 percent to revenue. Its government business grew 8 percent, excluding divestitures, making up 40 percent of revenue.

Profit for the second quarter ended Dec. 31 fell to 77 cents a share from 81 cents a year ago. Excluding certain items, it earned 85 cents a share. Analysts expected 79 cents, according to Reuters Estimates.

Revenue rose 7 percent to $1.61 billion. Analysts had forecast about $1.62 billion. [ID:nWNAB5862]

As other companies have suffered devastating shocks to their stock price, ACS has faltered but recovered from a $34.86 low in November to above $40 this year.

ACS, an S&P 500 component, provides business process outsourcing and information technology services to corporations and government customers.

Shares of ACS are almost flat in the last 52 weeks, compared with a 37 percent drop in the broader S&P 500 index .SPX. They closed at $44.73 Thursday on the New York Stock Exchange.

The Dallas, Texas company technology outsourcing company, employs 63,000 people. (Reporting by S. John Tilak in Bangalore; Editing by Deepak Kannan, Anil D’Silva)

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