Infosys -- India's second-largest software exporter by sales -- said its October-December consolidated net profit fell 3.6% to 15.82 billion rupees ($350 million), or 27.75 rupees a share, from 16.41 billion rupees a year earlier. Consolidated revenue dropped 0.8% to 57.41 billion rupees from 57.86 billion rupees a year earlier.

A Dow Jones Newswires poll of 13 analysts had predicted a net profit of 14.83 billion rupees on revenue of 55.80 billion rupees.
The stock closed up 4% at 2,587.45 rupees on the Bombay Stock Exchange, outperforming the benchmark Sensitive Index's 0.6% fall.
Bangalore-based Infosys--which is listed on the Nasdaq and the Bombay and National stock exchanges in India--is the first major local technology company to report results every quarter.
Its performance is considered to be an indication of how its rivals will do. Its results now raise expectations that Tata Consultancy Services Ltd., Wipro Ltd. and HCL Technologies Ltd. will also report numbers that reflect improving demand.
“The growth this quarter has been led by the top 10 clients,” Infosys Chief Operating Officer S. Shibulal said. Revenue from its top 10 clients--who contribute 27.5% to revenue--grew 12.2% from the second quarter. Total business volumes went up 6.1% sequentially, he added.
Indian technology companies are slowly recovering from the impact of the global economic slowdown, which had led their customers to scrap or delay projects and seek lower rates for products and services.
“The global economic recovery seems to be led by the U.S. and the financial services” sector, Chief Executive and Managing Director S. Gopalakrishnan said. “Even though IT budgets are expected to be flat in 2010, offshore outsourcing is expected to benefit from this recovery.”
Brokerage firm CLSA said the results were strong. “With a lot of business billed hourly or daily, more holidays in the December quarter mean a weak seasonal pattern. Not so this time,” it said in a note to clients.
CLSA, which targets the stock to rise to 3,100 rupees, said the results looked as if the outsourcing industry is returning to the momentum it witnessed a few years earlier.
“It feels like 2004 all over again as Infosys results point to a major up-cycle in outsourcing, driving earnings up to levels not imagined till recently.” Mr. Shibulal said Infosys is currently chasing multiple deals in the $100 million-$300 million range.
“We believe over $30 billion (worth) of deals are up for renewals during the current calendar year (2010) and Indian vendors are pursuing deals worth over $14 billion,” brokerage Centrum said in a note.
Infosys raised its earnings outlook to 106.85 rupees-107.06 rupees a share for the current fiscal year through March from its previous view of 99.60 rupees-100 rupees.
Its new revenue forecast for the fiscal year is 224.73 billion rupees-225.19 rupees billion, up from an estimate of 219.61 billion rupees-220.55 billion rupees given in October.
In dollar terms, Infosys expects revenue of $4.75 billion-$4.76 billion for the fiscal year, up 1.8%-2.0% from a year earlier. It expects earnings to be $2.26 per American Depositary Share, up 0.4% from the previous year.
Infosys, which gets about 99% of its revenue from outside India, said its forecast is based on the rupee staying at 45.75 to the dollar. The rupee, which is currently trading at 45.46 to the dollar, gained 3.7% against the greenback in the just-ended quarter.
For the current quarter ending March 31, the company expects earnings of 25.62 rupees-25.83 rupees a share on revenue of 56.75 billion rupees-57.21 billion rupees.
“They (Infosys) have already done around 81 rupees per share in three quarters and with the kind of pick up in volume growth they have shown now, the current FY10 outlook seems a little conservative,” said Indrajeet Kelkar of Dolat Capital.
In dollars, Infosys expects earnings per ADS at $0.56 on revenue of $1.24 billion-$1.25 billion in the current quarter, against net income of $334 million, or $0.59 per ADS, on revenue of $1.23 billion in the just ended quarter.
The company's operating margin expanded to 35.1% from 34.6% in the quarter ended Sept. 30, helped by higher pricing--which rose 1.1% from the previous quarter--and more people working on active projects, despite a strong rupee, Chief Financial Officer V. Balakrishnan told reporters.
Mr. Balakrishnan said he expects margins to fall 180-200 basis points sequentially in the fourth quarter as the rupee “may gain in the short term” and due to staff costs.
For the current fiscal year, operating margins are likely to be flat or expand by 50 basis points, while billing rates are likely to decline 3.7% from last year, he added.
(Source: The WSJ)