Infosys Net Beats Estimates on Orders, Lifts Forecast (Update2)
By Mehul Srivastava
Jan. 12 (Bloomberg) -- Infosys Technologies Ltd., India’s second-largest software exporter, reported profit that beat analysts’ estimates and reversed its earlier forecast for a drop in annual sales after customers increased orders. Shares climbed.
Revenue for the full year will rise as much as 2 percent to $4.76 billion, Bangalore-based Infosys said today, changing its previous forecast for a drop of as much as 1.3 percent. Net income as per Indian accounting standards fell 3.6 percent to 15.8 billion rupees ($348 million) in the three months ended Dec. 31. That compared with the 14.8 billion rupee median of 27 analyst estimates compiled by Bloomberg.
Chief Executive Officer S. Gopalakrishnan, who has cut prices to retain business from customers in the U.S. and Europe, said last month clients were getting more confident about the economic recovery and would gradually step up spending. Infosys won orders last quarter from Georgia Pacific LLC and Royal Philips Electronics NV, as Europe’s biggest consumer-electronics maker hired the Indian company to provide finance and back- office services for some of its operations in Latin America.
“The budgets for offshoring are expected to be biased towards Indian companies” as Fortune 500 companies accelerate cost cuts this year, Jayesh Gandhi, a Mumbai-based portfolio manager at Morgan Stanley, said in e-mailed comments before the earnings announcement. “Weak economic growth in G7/OECD economies augurs well for the software offshoring sector.”
Infosys shares rose 3.1 percent to 2,567 rupees as of 9:14 a.m. in Mumbai trading, the biggest contributor to the benchmark Sensitive Index’s 0.1 percent gain. The stock doubled last year in Mumbai trading compared with an 81 percent gain for the Sensex and industry leader Tata Consultancy Services Ltd.’s 214 percent advance.
‘Global Economic Recovery”
“Global economic recovery seems to be led by the U.S. and the financial services” industry, Gopalakrishnan said in the statement. “Even though IT budgets are expected to be flat in 2010, offshore outsourcing is expected to benefit from this recovery.”
Worldwide spending on IT services will grow 4.5 percent this year from an estimated $781 billion in 2009, researcher Gartner Inc. said in October. Economists surveyed by Bloomberg last month say U.S. gross domestic product will expand 2.6 percent in 2010 after shrinking 2.5 percent last year.
Third-quarter sales at Infosys fell 0.9 percent to 57.4 billion rupees. That beat the 55.8 billion rupees median analysts’ estimate.
Infosys designs and builds software programs, maintains computers and provides back-office support to Citigroup Inc., Goldman Sachs Group Inc., BT Group Plc and other customers.
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