Accenture Wraps Up Mogenesis Buyout - Analyst Blog

Technology outsourcing and consulting major Accenture plc (ACN) recently announced that it completed the acquisition of Beijing Genesis Interactive Technology Co. Ltd. aka Mogenesis. An embedded software services company, Mogenesis mainly provides mobile software services and licenses the same to organizations in China.

Embedded software or system becomes an integral part of the electronics device it is supplied with. Since the embedded system is dedicated to perform specific tasks, design engineers can optimize it to reduce the size and cost of the product and increase reliability and performance. Embedded systems are crucial for cost curtailment across different industries, such as mobile devices, automotive, medical equipment, and aerospace and defense.

The new unit will be integrated with Accenture's Embedded Software Services (ESS), which facilitates users in developing new devices or services. Mogenesis has been providing mobile software services since 2004. The developers had been engaged in hybrid software platforms such as Android, Symbian, Windows Mobile and LiMo. With this acquisition, Accenture's ESS business will be enriched with Mogenesis' rich intellectual properties, extended geographical reach and broad customer base.

We find consecutive acquisitions by Accenture encouraging as they help to strengthen the product portfolio. With the acquisition of Knowledge Rules Inc., a Philadelphia-based consulting company, Accenture will be able to enhance its Pegasystems capabilities specifically in the U.S. and European markets.

Moreover, the acquisition of Ariba's sourcing unit will boost Accenture's cloud-based services and enhance the existing level of its consulting and outsourcing services, thereby increasing customer demand.

Accenture posted encouraging fourth quarter results, beating the Zacks Consensus Estimate on the back of growing demand, which resulted in solid bookings. New business flow was also strong, given a rebound in tech spending. However, we prefer to take a cautious stance until there is more sustained revenue growth in the post-recession environment.

Currently, Accenture has a short-term Hold recommendation, as indicated by the Zacks #3 Rank.