Infosys Sees Higher Revenue, Net Income in 3Q but Lower Growth Possible in Short Term

By Ed Silverstein January 13, 2012

Infosys saw higher revenues and net income in the third quarter, but the company is facing some belt-tightening from businesses in Europe that could lead to lower growth in the short term. Still, the outlook for the longer term appears positive.

According to a recent company report, third quarter revenues at Infosys jumped by 13.9 percent – when comparing results from the current year with the same period of time last year. Revenues for the quarter, which ended on Dec. 31, were $1,806 million, according to a company statement. The company also reported net income (after taxes) of $458 million – a 15.4 percent increase compared to last year. In addition, during the quarter the company or its subsidiaries added 49 clients. There was also a net addition of 3,266 employees during the quarter, bringing the total to 145,088 employees at Infosys or subsidiaries.

A company statement released with the data, noted the current global economic pressures. “The global economy, driven by slower growth in developed markets coupled with the European crisis, could impact the growth of the IT industry,” S. D. Shibulal, CEO and managing director, at Infosys, said in the statement. “Notwithstanding short-term challenges, we are focused on long-term growth opportunities by investing in platforms and solutions – which will accelerate innovation, enhance returns for our clients and deliver higher business value.”

The company is also projecting that during the current quarter, which ends on March 31, revenues will be between $1,806 million and $1,810 million, according to the statement. Year over year growth will be between 12.7 percent and 13.0 percent, the company adds. And the company projects that for the fiscal year ending March 31, 2012, revenues are expected to be between $7,029 million and $7,033 million. Year over year growth is expected to be 16.4 percent.

In addition, The Associated Press reported that the company’s recent quarterly profits came in higher than expected. The AP adds that the “global economic slowdown and chaos in Europe” would impact company growth, news that is “disappointing investors.”

“While slowing global growth and the crisis in Europe could ultimately spell opportunity for Indian outsourcers, in the short term growth will be less than expected,” The AP said. “Revenue and earnings growth this quarter, in dollars, would be flat and [the company] cut its guidance for the year.”

Almost two-thirds of the company’s revenue comes from the United States, with 23 percent of revenue coming from Europe, The AP added.

The company’s chief financial officer V. Balakrishnan was quoted in a TechZone360 report that the company is “seeing clients much more cautious in their spending.” Manish Sonthalia, a fund manager at Motilal Oswal, told The AP that, “Austerity is the buzzword happening in Europe.”

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Ed Silverstein is a TechZone360 contributor. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell

TechZone360 Contributor

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