Financial Friday #6
Cognizant Technology solutions (CTSH) posted 4th quarter results on Friday. Generally earnings announcements are a crap shoot. However with the market being as down as it has been people are looking for a ray of sunshine. Cognizant is an outsourcer’s whose business model is largely a labor arbitrage play. As companies are down sizing and looking to cut costs IT outsourcing is an easier sell. CTSH also has many clients in the financial industry who have merged with other CTSH clients. This is actually a boom to CSTH since they need to now consolidate two companies systems. So where there were say 5 consultants are each client in order to consolidate they can add another 5 for the consolidation project and thus bill 15 consultants instead of 10.
The fact that one of their biggest competitiors Satyam Computer Services just admitted faking their financials for the last few quarters is also a plud for CSTH. Based on all this info I bought CTSH 42 shares@$19.56 on 2/11 and was able to sell at $21.30 right after the market had processed the earnings call on 2/13 making $73. Not really a huge gain this week but a pretty safe play all things considered.
Current balance: $894
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