INFY ( $70 tumbles $57) Slower growth outlook dogs Infosys
By Will Pollock, Medill News Service
Last Update: 5:13 PM ET Apr 11, 2001
FREMONT, Calif. (CBS.MW) -- Shares of Infosys Technologies took a nosedive Wednesday when the company reported that its growth could slow significantly in the coming months.
The company's (INFY: news, msgs, alerts) stock price plunged more than 22 percent, dropping $15.95 to $55.50.
Current numbers from the company weren't bad. As one of India's premier software service providers, Infosys reported revenue for the fourth quarter of $120.7 million, up 89.8 percent from the same period last year.
The company earned $38.3 million or 29 cents per share, matching analysts' consensus, according to First Call/Thomson Financial.
The company earned 14 cents a share a year ago.
"We had a very strong quarter," said Chairman N.R. Narayana Murthy.
But it was the future revenue guidance offered by Murthy that caused the stock to tumble.
Murthy said revenue would grow 30 percent to about $530 million to $540 million in 2002 after rising 103 percent in 2001. Annual earnings were expected to grow to $1.24 to $1.27 a share for fiscal 2002, compared with analysts' previous estimate of about $1.45 a share.
For the first quarter, the company said it expects to make 28 to 29 cents a share on revenue of $123 million to $125 million. Analysts had been forecasting earnings of 30 cents a share.
"With the economic environment in North America becoming challenging, we estimate a revenue growth rate of 30 percent for fiscal 2002. As always, we will exploit any new opportunity for higher growth."
Greg Gore, senior research analyst with WR Hambrecht, said the market's sharp reaction was based on a promise undelivered.
"There was general agreement that Infosys would continue to grow as fast as they said it would last quarter," he said. "What they said this morning is that they were wrong about growth prospects last quarter," which will impact the rest of the year.
Gore added that the stalled U.S. economy has "adversely impacted" the firm's outlook, but Infosys' future may not be quite as bleak as indicated by its stock fall.
"For about three months I expect the stock to trade sideways," he said. "Beyond that, as people get more confident that Infosys is going to flourish -- as I think it will -- the stock can take off again."
Will Pollock is a reporter for the Medill News Service in Washington.
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