(HOT) Starwood Hotels & Resorts Worldwide Invests $200 Million in Accenture IT

March 17th, 2010

Starwood Hotels & Resorts Worldwide Inc. (HOT) yesterday announced that it has awarded an approximately $200 million contract to IT vendor Accenture (ACN).

Under the contract that will span a number of years, Accenture will provide a range of IT services including application outsourcing and infrastructure outsourcing. Accenture will develop, maintain and run applications for the hotel company, as well as manage servers, data centers and end-user computers.

This long term investment will improve the quality and efficiency of Starwood’s IT operations. This will also help management to focus on core business, thereby furthering the group’s market position.

Estimate Revision

Over the last 30 days as well as the last 7 days, the stock of Starwood has not experienced any estimate revisions for the first quarter 2010 from the 17 analysts covering the stock. Currently, the Zacks Consensus Estimate for the first quarter is an operating loss of one cent per share, which would be down by 104.2% from the year-ago quarter.

The absence of estimate revisions for the first quarter indicates a lack of any clear directional pressure on the performance of the stock in the near term.

With respect to earnings surprises, the stock has been almost steady over the last four quarters, with all positive surprises. The average remained positive at 112.8%. This implies that Starwood has surpassed the Zacks Consensus Estimate by 112.8% over that period.

Starwood’s fourth quarter results came in better than the Zacks Consensus Estimate, primarily driven by better-than-expected revenue. Though the company continues to experience a decrease in revenue per available room (RevPAR), the rate of deterioration has moderated. Going forward, the company’s strong pipeline, significant international exposure, solid balance sheet, shift to a fee-based business model and a less capital intensive timeshare business augur well.

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