Infosys Q4 net soars, sees Q1 slowing

Infosys Q4 net soars, sees Q1 slowing

Indian software company Infosys Technologies Ltd. said its fourth-quarter earnings jumped two-thirds on increased outsourcing by U.S. companies and the sale of a stake in a subsidiary.

But Infosys, the second-biggest company in India's $17.5 billion software and back-office services industry, said it expected revenue in the first quarter to be nearly flat with the fourth because customers were busy complying with new U.S. rules tightening financial controls.

"We see a temporary slowdown because of pre-occupation with compliance," Chief Operating Officer S. Gopalakrishnan told a television channel. "We saw that in Q4," he said. "Some of that will be there in Q1 also."

Excluding an exceptional gain for the sale of a stake in Yantra Corp., the fourth-quarter figures were weaker than expected.

Infosys, whose customers include financial giants Goldman Sachs Group and Bank of America and retailer J.C. Penney Co., forecast first-quarter earnings per share would rise 32.7 percent from a year earlier on a similar climb in revenues.

"The company is indicating that some client commitments are getting delayed, but that may hurt business only in the first part of the year," said Sandeep Shenoy, strategist at Pioneer Intermediaries. "The past year was a jackpot for Infosys, but we have to expect a slowdown in growth rates off a higher base."


Nasdaq-listed Infosys said its fourth-quarter net profit before exceptionals rose 53 percent to 5.13 billion rupees ($117.5 million). Revenue jumped 47 percent to 19.87 billion rupees.

The market had expected net profits of 5.22 billion rupees and revenues of 20.25 billion rupees, according to a Reuters poll of 11 analysts.

After the exceptional income of 451.9 million rupees, net profit rose 67 percent to 5.59 billion rupees.

Gopalakrishnan told Reuters he expected pricing to be stable amid competition from multinational companies.

Infosys said it expected full-year earnings per share to rise between 23 percent and 24.9 percent to 84.6-85.9 rupees and revenue to grow 24.7-26.6 percent to between 88.9 billion and 90.29 billion rupees.

"It took them 23 years to get to $1 billion in revenue, it's taking them just two years to get to $2 billion," said Shenoy. "That's remarkable."

The new U.S. rules, arising from a crackdown on accounting fraud, requires managers to explain in annual reports how they keep their finances in order and for outside auditors to approve their methods. Companies are complaining about the costs and time involved to do this.

The impact of the new rules led Infosys to forecast first-quarter earnings per share of 19.3 rupees and revenues of 20.02 billion to 20.2 billion rupees.

Infosys said it added 37 customers in the past quarter, taking its client list to 438. It hired a net 1,521 employees, expanding its army of highly skilled workers earning a fraction of U.S. wages to 36,750.

Shares of Infosys, which ranks behind Tata Consultancy Services in Indian software exports, have risen 0.6 percent this year, while the benchmark Bombay Stock Exchange index has lost 2.1 percent. The market was closed on Thursday for a holiday.

The results came two days after mid-sized MphasiS BFL Ltd. set high expectations for Infosys by reporting a better-than-expected 23 percent jump in quarterly profits.

TCS is due to report results on April 19, and Infosys's Bangalore peer, Wipro, reports on April 22.

($1 = 43.7 Indian rupees)

Re: Infosys Spell bounds

The script has wonderful results this qtr and last year it gave 3 share for 1 held as bonus. The market waited impaitently for good news to emerge but no disclosure or announcment but now as the wipro has announced we hope this leader company shall also bring laurels as laurustinus for its shareholder and trigger to the market.

With best of luck to all dear sharehoilder of this company i remain.with regard.urs

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