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Infosys Q3 profit lags estimates

Bangalore, January 13, 2011

Quarterly profit at  India's Infosys Technologies lagged analysts'  estimates and the company said the sluggish economic recovery  in developed markets could hit the sector's growth, sending  its shares to their lowest in more than three weeks.

India's No.2 software services exporter, which counts  Goldman Sachs and BT among its clients, expects  its dollar revenue to rise 25.7 to 26.1 percent in the year  ending March, up from a 24 to 25 percent forecast in October.

Most analysts had expected Infosys to raise its dollar  revenue growth outlook to 27 to 28 percent.

Infosys, which kicked off results for the country's  showpiece $60 billion IT services sector, said net profit for  the fiscal third-quarter ended December rose to 17.8  billion rupees ($396.4 million) from 15.6 billion a  year ago. This compares with a Reuters poll of 18.2 billion  rupees.

"Normally the December quarter is not that great for IT  companies, but still expectations were good because of talk  about recovery in the US," said Neeraj Dewan, a director at  Qauntum Securities in New Delhi.     

"People won't be surprised if Tata Consultancy Services and Wipro also report below expectations, because Infosys has  set that kind of a direction," he said.     

Analysts said the possibility of a sharper appreciation in  the rupee, rising wages and intensifying competition from  global firms such as IBM , Accenture and  Hewlett-Packard were also key risks for export-driven  Indian outsourcers.

Infosys, sector leader Tata Consultancy Services, and No. 3 Wipro, have been on a hiring spree and  have given pay hikes of up to 20 percent to fight poaching by  global rivals.

"The weaker economic recovery in developed markets coupled  with high unemployment and risk of sovereign default could  impact industry growth," Infosys chief executive S
Gopalakrishnan said in a statement.

Shares in Infosys, valued at about $42 billion, fell as  much as 4.2 percent after the results in a broader Mumbai  market down 0.5 percent. Shares in rival Tata  Consultancy were up 0.6 percent. - Reuters    




Tags: Information Technology | India | Infosys | IT |

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