Infosys Technologies cut its forecast for full-year dollar revenues due to the global financial crisis, knocking its shares as much as 17 per cent even after it beat expectations with a 30 per cent rise in quarterly profit.
India's No.2 information technology services exporter also said it would not increase its £407 million ($702 million) takeover offer for British consultancy Axon, after smaller rival HCL Technologies trumped it with a £441 million bid.
Infosys said yesterday the offer price was fair and the decision was also based on the current economic environment.
Chief executive S Gopalakrishnan said the company, which is sitting on a $1.9 billion cash pile, was still open to acquisitions.
India's export-driven software service firms, used to a scorching pace of growth, have been badly hit by a slowdown in the US, which contributes more than half their revenue, and the spreading global financial turmoil.
"Now that Infosys has cut guidance, other IT companies may follow suit. The bad times for IT companies may continue for a year at least," said Harit Shah, research analyst at Angel Broking.
Infosys forecast revenue for the year to March would grow 13.1-15.2pc in dollar terms, down from July's forecast of 19-21pc. It also cut its earnings per share forecast to $2.24 from $2.32-$2.36 projected in July.
"We have revised our US dollar revenue guidance to reflect the current economic situation and the drastic depreciation of major global currencies against the US dollar," Gopalakrishnan said.
Average billing rates fell 0.3pc in July-September, but Infosys was not seeing any big project cancellations and was optimistic about the medium-to long-term business growth, Gopalakrishnan said. It added 40 new clients in the quarter, taking its total client tally to 586.
Infosys cut its forecast as it wanted to be cautious after the financial turmoil of the past month, Gopalakrishnan said.
"We're not seeing any big project cancellations from any client. We're not seeing any drastic (pricing) renegotiations from any clients. For us, the pricing environment is stable, it's business as usual," chief financial officer V Balakrishnan said.