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Infosys sales guidance disappoints, shares plunge

Infosys sales guidance disappoints, shares plunge

April 13th, 2012 by ERIKA KINETZ, AP Business Writer in News

MUMBAI, India (AP) - Infosys Technologies reported quarterly profit of $463 million Friday and said its revenue will grow more slowly than the industry's this fiscal year, eroding its position as India's outsourcing bellwether.

Infosys shares plunged 11 percent in Mumbai.

Net income for the quarter ended March grew 15.2 percent in dollar terms from a year earlier to $463 million. Sales grew 10.5 percent, to $1.8 billion, in line with analyst expectations but lower than the company's earlier guidance.

A survey of analysts by FactSet predicted quarterly sales of $1.8 billion and net income of $443.7 million.

Infosys said revenue for the fiscal year ending March 2013 would grow 8 to 10 percent, to between $7.6 billion and $7.7 billion - less than industry body Nasscom's forecast of 11 percent to 14 percent sales growth for the industry.

"The year ahead looks challenging for the IT services industry, with slow recovery in the global markets," Infosys chief executive S.D. Shibulal said in a statement.

The guidance unnerved investors worried about the impact of global uncertainty on India's outsourcing sector, dragging shares of competitors Tata Consultancy Services down 3.2 percent and Wipro down 1.2 percent in morning trade.

Infosys has said it is focusing on high-margin business, which may erode its earnings in the short term, said Kotak Securities analyst Dipen Shah.

"Guidance has been greatly disappointing. They are focusing only on high quality growth. It seems they are letting go of some business which is not available at the level of margins they expect," he said. "That is what has likely impacted them."

Earnings for the March quarter grew 1.1 percent from the prior quarter in dollar terms, despite a 1.9 percent quarterly decline in sales thanks to an unusually large $17 million cut in administrative expenses.

The company stepped up hiring, adding a net 4,906 employees during the period, even as staff attrition dipped to 14.7 percent from 17 percent a year earlier.