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October 10, 2009

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Infosys' net dips but raises forecasts

INFOSYS Technologies Ltd reported a slight decrease in quarterly profit yesterday but raised its revenue and earnings forecasts -- a signal the worst may be over for India's software services industry after being hard hit by the global downturn.

Infosys, India's second-largest outsourcing firm, said net income fell 0.9 percent, to US$317.0 million, in the quarter ended September 30 based on international accounting standards, beating its own forecast.

Revenues for the period were US$1.15 billion, a 5.1 percent decline from the same period a year ago, but a 2.9 percent improvement from the prior quarter.

"The business climate has improved," said Infosys CEO S. Gopalakrishnan.

But, he added: "We should remain cautious. Globally, yes, there are signs of a recovery, but there is still concern."

Sandeep Muthangi, an analyst at Mumbai's IIFL Capital, also cautioned that it's too early to say "turnaround" because revenue growth hasn't gained momentum. He doesn't expect that to happen until after March of next year.

"The results are decent enough but revenue acceleration will not happen this year," he said.

Infosys said it expects revenues for the fiscal year to be US$4.6 billion to US$4.62 billion, about 1 percent less than last year, but a more optimistic forecast than it made in July. It gets nearly two-thirds of its revenue from North America and one-third of revenues from banking and financial services companies.

The firm said earnings per American Depository share for the fiscal year would be US$2.09 to US$2.10, 6.7 percent to 7.1 percent less than last year. That's more optimistic than its July forecast of an 11.1 percent to 12.4 percent fall in earnings per share.



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