Daily Brief: Accenture Settles Into Its Niche In The $1 Trillion Cloud Market

Daily Brief: Accenture Settles Into Its Niche In The $1 Trillion Cloud Market

almost 3 years ago3 mins

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Accenture reported better-than-expected results on Thursday, as more and more businesses ruthlessly scrap their once-beloved hardware in favor of cloud computing. N’aww.

What does this mean?

At a time when “flexibility” has become the hot new business buzzword, companies specializing in everything from healthcare to financial services have been scrambling to shift their centralized IT operations to the cloud – and they’ve been turning to Accenture to help them do just that. The company, for its part, is feeling so confident that everyone’s going to keep asking for help that it even raised its full-year forecast: the firm’s expecting sales to grow by around 7.5% compared to the year before, up from its previous forecast of 5%. That’ll do, Accenture: investors sent its shares to all-time highs on Thursday.

Accenture stock
Source: Google Finance

Why should I care?

Zooming in: Small acquisitions > big acquisitions.

Accenture’s strategy for staying at the cutting edge of tech – across everything from digital marketing to industrial automation – is to buy other businesses and soak up their talent and ideas. The company’s announced at least 65 takeovers in the last two years alone – more than any other major business, and an average of one every week and a half. Most of the deals are small in size, sure, but that might be to Accenture’s advantage: research from McKinsey suggests that lots of smaller acquisitions over time add more value than one tentpole buy.

Cloud industry size
Source: McKinsey

The bigger picture: Accenture is spreading its bets.

Cloud computing is big business: $1 trillion big. And while Accenture’s cloud software segment might not be anywhere near as substantial as, say, frontrunner Amazon, it has settled into a snug position as both cloud consultancy and cloud provider. In other words, it both advises clients on how to implement cloud computing and offers services of its own – meaning it’ll get paid even if they end up plumping for one of the bigger players.

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Dollar General’s Earnings Missed Expectations

Dollar General image

US discount retailer Dollar General reported worse-than-expected earnings on Thursday, and shoppers don’t look like they’re about to start filling their carts again anytime soon.

What does this mean?

Americans stockpiled Dollar General’s low-priced groceries in their droves during the pandemic, but those glory days might be a thing of the past. The retailer said sales were down by 16% in the first two weeks of March compared to the same period last year, and it’s expecting its full-year revenue to drop off by as much as 6% compared to 2020. That’s more of a slowdown than analysts were expecting, so it’s probably no wonder the company’s shares initially tumbled 6%.

Dollar General stock

Why should I care?

The bigger picture: People want luxuries, not staples.

It isn’t just groceries Americans have been hoarding, but cash too – there’s not been a lot to spend it on, after all. In fact, Wells Fargo reckons consumer spending in the next two quarters is likely to be the strongest in at least 70 years, driven primarily by nice-to-haves. That might explain why Signet Jewelers’ earnings hit a more positive note than Dollar General’s on Thursday: the world’s biggest diamond jewelry retailer saw its sales outlook top estimates, and its stock initially shot up 6%.

Zooming out: Beware, beware post-IPO bumps.

Petco reported its own strong earnings on Thursday, in the pet retailer’s first update since its initial public offering in January. That means its shares have risen 30% since then – a gain of 21% more than Poshmark, the online thrift store that listed on the same day and posted a disappointing sales outlook earlier this month. Still, let’s meet back here in half a decade and see how they’re both getting on then: 60% of IPOs end up trading below their initial prices five years after they list anyway.

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