The Successful Investor Hotline – Friday, July 30, 2010

Article Excerpt

CGI GROUP INC., $14.70, Toronto symbol GIB.A, is Canada’s largest provider of computer-outsourcing services. The company’s services help its customers automate certain routine functions, such as accounting and buying supplies. That makes its clients more efficient, and lets them focus on their main businesses. This week, the company reported earnings that matched the consensus estimate. But an unexpected revenue drop caused stock to fall 10%. In its third quarter, which ended June 30, 2010, CGI earned $85.9 million. That’s up 12.0% from $76.7 million a year earlier. Earnings per share rose 20.0%, to $0.30 from $0.25, on fewer shares outstanding. However, revenue fell 5.1%, to $901.6 million from $950.4 million. That missed the consensus revenue estimate of $936 million. The strong Canadian dollar was the main reason for the drop, because a high dollar hurts the contribution of CGI’s U.S. and European operations. Together, these businesses supply 40% of the company’s overall revenue. Without the negative impact of exchange rates, revenue would…