Thomas Victor

Infosys' Q1 Results: Gains From Rupee's Strength

Sorry! Infosys hes declared no truth to rumors specifically re. CapGemini and (inference) SmartStream.

in.biz.yahoo.com/07071...

Nasdaq-listed Infosys was looking for acquisitions in non-English speaking markets like Germany, France and Japan to accelerate market penetration and get access to new technology services, he said.

Infosys' Q1 Results: Gains From Rupee's Strength

Hi Dayanand,
Interesting article - another great quarter from Infosys I think but there is the Rising Rupee factor etc. and as you mention now the 'other income' issue.

We'd discussed previously the difficulties of an Indian IT company being able to break into the the top levels of Management Consulting in the US & Europe and being able to compete with McKinsey, Deloitte, Accenture IBM etc.

But now we're hearing talk of acquiistion/merger with CapGemini or SmartStream Technologies.

Infosys plus Capgemini will be a full blown challenge to Accenture and IBM, VERY EXCITING, if the CapGemini and Infy people can work together productively and amicably.

SmartStream seems to be a Banking specialty - would enable INFY to dominate even in the Finance sector and maybe push more sales of it's banking software product Finacle.

This is beginning to sound like the Mittal Steel plus Arcelor and the Corus plus Tata Steel stories! I think Infosys has to take the plunge otherwise the 30 percent plus yearly growth rate will be difficult to maintain.

Any thoughts on the above?

Also what happened to the CEO who came after Narayanamurthy, Nandan M. Nilekani? I'm a bit surprised he has ben replaced as CEO/MD so soon. Any problems I wonder? Remember Phaneesh the US executive, he had to quit following sexual harassment charges.

Thomas

Indian Outsourcing Stocks: Beware The Stronger Rupee

Eric,

Dayanand is correct, no way that CTSH is not going to be impacted by rising Indian wages. The key thing is where is the army of the software developers located?

My pick now is ACN.

All of my meagre investment money is in INFY and WIT. Otherwise I would now buy Accenture (ACN). Look at it's P/E ratio. I'm an Indian with a US MBA and currently working in a large California IT shop. I have experience of both the top US mgmt consultants and offshore software companies INFY, HCL & Covansys. Our company has sporadically offshored to those three.

ACN is located at the top of the food chain in this situation. They already have the established elite top level US consultants. Their problem is to rapidly establish a high quality software factory in India, luring away stars from INFY, TCS etc. plus recruiting from campuses.

That seems easier for ACN to do than for, say INFY, to establish a Mgmt Consulting presence in the US, and EU. Similar to Mittal and Tata making deals with Arcelor and Corus who are higher up in the food chain maybe the Indian companies should buy out ACN

Thomas

Infosys: The Relationship Between Net Income, Market Cap and Employees

Asif, I agree that revenue/employee is important. But isn't it the same problem for all of Infosys's competitors? Salaries are rising for anyone using Indian software engineeers. Rupee appreciation has also increased costs for all offshorers.

What will differentiate them is ability to steadily win new contracts, keep existing ones and ability to increase prices, I think.

I guess I'm concerned about INFY's drop in 2007 after it had risen steadily to $6o plus - after Feb 20th it has been falling and falling - for a while it looked like it might slide all the way down to $40! However after closing at $47.49 on June 7th, it has rebounded back to last week's close of $53.31. Same story with CTSH.

This rebound seems to be due to INFY making presentations to brokerage houses and I presume, telling them that prior guidance on Earnings and Revenue still held inspite of adverse conditions. From postings on INFY message board, a Citibank analyst has reiterated his recommendations on INFY and CTSH.

There is also a feeling that the offshoring field is breaking up with the big ones - TCS,INFY,CTSH,WIT moving ahead along with IBM and Accenture while the smaller ones - Patni, Covansys etc. are having difficulty getting contracts since the large companies are preferring to go with the big offshorers. Covansys has been bought by CSC and Patni is entertaining buy out offers from private equity firms.

One odd occurrence is that IBM has bagged a ONE BILLION DOLLAR IT DEAL from Bharti Airtel in India!
There is something fishy about that deal - a $1 billion deal in India iself from an Indian company going to IBM and not TCS,INFY or WIT?

I guess things will become clearer beginning of July when INFY, as usual, will be the first to state earning for the quarter and we can see if their growth rate projections have dropped or are holding steady.

Infosys: The Relationship Between Net Income, Market Cap and Employees

Frankly, putting together this table of INFY's revenue, income, market cap and #employees over the years seems rather pointless. How does it help one decide whether to buy, hold or sell?