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Slowdown: Infosys cuts FY'12 revenue outlook by 3%

Last updated on: January 12, 2012 16:12 IST

Slowdown: Infosys cuts FY'12 revenue outlook by 3%

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Infosys on Thursday cut its full-year revenue outlook in dollar terms by about 3 per cent because of mounting economic uncertainty in the euro zone, a move that did not go down well with investors.

"The major disappointment came from lowering of the FY2012 USD guidance below our/consensus estimates to 16.4 per cent from the earlier 17-19 per cent y-o-y," Angel Broking Research Analyst (IT) Ankita Somani said.

Infosys has forecast dollar revenue growth of 16.4 per cent for the fiscal year to March 31, down from 17.1 per cent to 19.1 per cent projected in October.

Reacting to the news, the stock plunged by over 7 per cent during the trading session to a low of Rs 2,607.60 on the BSE.

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"The environment is very uncertain. There is no definitive answer to the euro zone crisis at this point. Client confidence is down. Spending is going to be choppy because it is going to depend on the clients' confidence. So, in that situation, we need to remain cautious. That is the reason we have given a flat guidance for Q4," Infosys CEO and Managing Director S D Shibulal said.

In rupee terms, the company expects revenues in the range of Rs 9,391 crore (Rs 93.91 billion) to Rs 9,412 crore (Rs 94.12 billion) for the quarter ended March 31 and in the range of Rs 34,273 crore (Rs 342.73 billion) to Rs 34,294 crore (Rs 342.94 billion) for the full year.

"There are a lot of opportunities even in tough times, offshoring could increase. The challenge is how confident the clients are in spending even if they have budgets... which is why we are cautious," Shibulal added.

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Image: Infosys campus in Electronics City in Bangalore
Photographs: Reuters
Tags: Shibulal , CEO

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The company added that the IT budgets of its clients may get affected due to the macro-economic situation. The IT firm is already seeing cautious spending by clients.

"When we initially gave guidance, we were comfortable with it as clients had the budget, we thought they would spend. But when the environment turned bad, they became very cautious on spending, hence we said we will be closer to lower end of the guidance and that is where we ended," he said.

In the third quarter, the company added 49 new clients. In the last nine months, the company has added 120 clients. "There were good deal wins in Q3, including five large deals -- two of them above USD 500 million," Infosys Member of the Board and Chief Financial Officer V Balakrishnan said.

He added that the company has not seen any project cancellation, but the velocity of business is getting impacted, with new projects either getting delayed or postponed.

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Image: Infosys Member of the Board and Chief Financial Officer V Balakrishnan


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The company has not seen any deceleration in terms of order flows from the Europe region, Infosys' second-biggest market, but there is cautiousness, Balakrishnan said.

The country's second-largest software services exporter said it expects clients to close their IT budgets for the next year by the middle of February at the latest.

"Early indications are it (budget) will be flat, with marginally down." Shibulal said.

Despite the global economic uncertainty, Infosys on Thursday posted a better-than-expected 33 per cent rise in net profit to Rs 2,372 crore (Rs 23.72 billion) for the third quarter of this fiscal, helped by a weak rupee.


Photographs: Sherwin Crasto/Reuters

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