William Blair: Selling Cycles For III’s Higher ASP Strategic Engagements To Remain Extended

Analysts at William Blair & Co maintain their "outperform" rating on Information Services Group Inc III. Information Services Group is set to report Q2 results after the market closes on August 2. “Information Services Group reported solid first quarter 2010 results in early May, with consolidated revenue that exceeded our model and the consensus projection, while fully diluted cash (excluding amortization and stock-based compensation) earnings per share matched our estimate, which was a penny ahead of Street expectations… At the time, we described management’s tone as cautiously optimistic with the possibility that a continuation of trends could translate into an acceleration of customer spending on more strategic (and higher ASP) engagements during the second half of 2010,” the analysts mention. William Blair adds, “Recent economic volatility during the second quarter of 2010, however, appears to have driven many existing and prospective customers to return to a more-cautious, wait-and-see stance to buying decisions. We believe that positive sentiment among clients regarding opportunities to drive long-term efficiencies through outsourcing remains strong, but anticipate that in the near term selling cycles for higher ASP strategic engagements will remain extended relative to historical levels…. BPO activity levels continue to be dominated by smaller contract sizes. Looking forward to the remainder of 2010, the recent TPI report emphasized that third-quarter levels tend to be seasonally weaker, with the trend expected to hold true this year; a relatively light industry backlog also provides little visibility into the prospects for the fourth quarter of 2010.” More Analyst Ratings here