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July 20, 2011, 2:38 AM EDT
By Ketaki Gokhale and Jay Shankar
(Updates with analyst comment in fourth paragraph.)
July 20 (Bloomberg) -- Wipro Ltd., India’s third-largest software exporter, posted profit that met analyst estimates and forecast revenue from computer services may rise as little as 2 percent as clients hold off from outsourcing larger projects.
Net income was little changed at 13.3 billion rupees ($299 million) in the fiscal first quarter ended June 30, Bangalore- based Wipro said today. Profit compared with the 13.1 billion- rupee median of 41 analysts’ estimates compiled by Bloomberg.
Revenue from outsourcing contracts may grow to between $1.44 billion and $1.46 billion in the second quarter from the previous three months as customers hold back from signing deals amid global economic uncertainty. Wipro was set for its biggest fall in three months in Mumbai trading on concern reorganization of the information technology business by its new Chief Executive Officer T.K. Kurien may take time to yield results, according to MF Global Sify Securities Pvt.’s Vihang Naik.
“Growth in IT services is well below street, and our, estimates,” said Naik. “More importantly, for the second quarter, which is typically the strongest for all the IT companies, they’ve guided for slower growth than their peers.”
MF Global, based in Mumbai, may cut Wipro’s rating from the current “neutral” after the results, he said.
Wipro fell 3 percent to 402.65 rupees as of 11:02 a.m. in Mumbai, poised for its biggest drop since April 15. The stock was the worst performer on India’s 30-company benchmark Sensitive Index, which was little changed.
Sales Forecast
The forecast for second-quarter revenue at its information- technology unit compares with sales of $1.41 billion in the three months ended June. Overall first-quarter sales grew 18 percent to 85.6 billion rupees, according to the statement.
Infosys Ltd., India’s second-largest software exporter, on July 12 forecast second-quarter sales may climb 3.5 percent to 5 percent from the preceding three months to range between $1.73 billion and $1.76 billion. Still, the stock fell the most in almost three months that day after the company’s projection for annual sales missed analysts’ estimates.
Wipro was seeing some slowdown in orders from companies in the financial services industry, which contributed 27 percent of Wipro’s revenue in the year ended March, Kurien said today.
‘See Weakness’
“In terms of demand in investment banking, we see weakness, whether that’s going to spread to retail banking, that we still don’t know,” Kurien said in a Bloomberg-UTV interview.
Wipro doesn’t give sales or profit forecast for all its businesses combined. The company also makes light bulbs, hydraulic equipment, soaps and other consumer products.
The software exporter, which provides services such as designing and building software programs, product-engineering and back-office support to companies including BP Plc, and Verizon Communications added 49 customers in the quarter.
The company’s information-technology division hired 4,105 employees last quarter and had 126,490 workers at the end of June, according to the statement.
“We are seeing early signs of positive momentum after the reorganization,” billionaire Chairman Azim Premji said in the statement.
Wipro said on Jan. 21 that Kurien would take over as chief executive officer of its information technology business after Girish Paranjpe and Suresh Vaswani resigned as joint CEOs. Kurien has worked at Wipro for more than 10 years and earlier served as president of its eco-energy business and head of the consulting and business process outsourcing businesses.
The software company in February said it would reorganize its technology business into industry-focused units, including divisions devoted to banking and financial services, healthcare, and media and telecommunications. The reorganization was a “long-term play” for Wipro, that would start to yield benefits only from the second half of the year, Kurien said at the time.
--Editors: Suresh Seshadri, Anand Krishnamoorthy.
To contact the reporters on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net; Jay Shankar in Bangalore at jshankar1@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
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(Updates with analyst comment in fourth paragraph.)
July 20 (Bloomberg) -- Wipro Ltd., India’s third-largest software exporter, posted profit that met analyst estimates and forecast revenue from computer services may rise as little as 2 percent as clients hold off from outsourcing larger projects.
Net income was little changed at 13.3 billion rupees ($299 million) in the fiscal first quarter ended June 30, Bangalore- based Wipro said today. Profit compared with the 13.1 billion- rupee median of 41 analysts’ estimates compiled by Bloomberg.
Revenue from outsourcing contracts may grow to between $1.44 billion and $1.46 billion in the second quarter from the previous three months as customers hold back from signing deals amid global economic uncertainty. Wipro was set for its biggest fall in three months in Mumbai trading on concern reorganization of the information technology business by its new Chief Executive Officer T.K. Kurien may take time to yield results, according to MF Global Sify Securities Pvt.’s Vihang Naik.
“Growth in IT services is well below street, and our, estimates,” said Naik. “More importantly, for the second quarter, which is typically the strongest for all the IT companies, they’ve guided for slower growth than their peers.”
MF Global, based in Mumbai, may cut Wipro’s rating from the current “neutral” after the results, he said.
Wipro fell 3 percent to 402.65 rupees as of 11:02 a.m. in Mumbai, poised for its biggest drop since April 15. The stock was the worst performer on India’s 30-company benchmark Sensitive Index, which was little changed.
Sales Forecast
The forecast for second-quarter revenue at its information- technology unit compares with sales of $1.41 billion in the three months ended June. Overall first-quarter sales grew 18 percent to 85.6 billion rupees, according to the statement.
Infosys Ltd., India’s second-largest software exporter, on July 12 forecast second-quarter sales may climb 3.5 percent to 5 percent from the preceding three months to range between $1.73 billion and $1.76 billion. Still, the stock fell the most in almost three months that day after the company’s projection for annual sales missed analysts’ estimates.
Wipro was seeing some slowdown in orders from companies in the financial services industry, which contributed 27 percent of Wipro’s revenue in the year ended March, Kurien said today.
‘See Weakness’
“In terms of demand in investment banking, we see weakness, whether that’s going to spread to retail banking, that we still don’t know,” Kurien said in a Bloomberg-UTV interview.
Wipro doesn’t give sales or profit forecast for all its businesses combined. The company also makes light bulbs, hydraulic equipment, soaps and other consumer products.
The software exporter, which provides services such as designing and building software programs, product-engineering and back-office support to companies including BP Plc, and Verizon Communications added 49 customers in the quarter.
The company’s information-technology division hired 4,105 employees last quarter and had 126,490 workers at the end of June, according to the statement.
“We are seeing early signs of positive momentum after the reorganization,” billionaire Chairman Azim Premji said in the statement.
Wipro said on Jan. 21 that Kurien would take over as chief executive officer of its information technology business after Girish Paranjpe and Suresh Vaswani resigned as joint CEOs. Kurien has worked at Wipro for more than 10 years and earlier served as president of its eco-energy business and head of the consulting and business process outsourcing businesses.
The software company in February said it would reorganize its technology business into industry-focused units, including divisions devoted to banking and financial services, healthcare, and media and telecommunications. The reorganization was a “long-term play” for Wipro, that would start to yield benefits only from the second half of the year, Kurien said at the time.
--Editors: Suresh Seshadri, Anand Krishnamoorthy.
To contact the reporters on this story: Ketaki Gokhale in Mumbai at kgokhale@bloomberg.net; Jay Shankar in Bangalore at jshankar1@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
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