Saturday, 16 April 2011

Infosys skids in the Quarterly results!!! Is it the End of Infosys dominance!!!

IT bellwether Infosys on Friday reported nearly 14% in consolidated net profit at Rs 1,818 crore for the fourth quarter ended March 31, 2011, which is less than the market expectations.

Also, the board has declared a final dividend of Rs 20 per share for the fiscal on every share of Rs 5 held.

The country's second largest software major had a net profit of Rs 1,600 crore in the March quarter of the previous fiscal (2009-10), Infosys Technologies said in a filing to the Bombay Stock Exchange.

However, analysts said the market was expecting 3.3-6.7% growth in Infosys' consolidated net profit between Rs 1,839.40 crore- Rs 1,899.20 crore in the quarter ended March 31.

Income from software services, products and business process management rose to Rs 7,250 crore for the fourth quarter from Rs 5,944 crore in the year-ago period, up 22%.

The company while announcing its third quarter results earlier had given Q4 revenue guidance in the range of Rs 7,157- Rs 7,230 crore, and anticipated revenue for the full year ending March 31, 2011, in the range of Rs 27,408-Rs 27,481 crore.

Reacting to the results announcement, the company shares were trading at Rs 3,062, down 7.38% over the previous close on BSE.

Further, as on March 31, 2011, cash and cash equivalents, including investments in available-for-sale financial assets and certificates of deposits was Rs 16,810 crore against Rs 15,819 crore as on March 31, 2010.

"We expect the demand environment to be normal this year for the industry. We have created a structure with strong customer driven vertical focus and have enhanced our investment to take advantage of the opportunities we see in the market," said Infosys CEO and Managing Director S Gopalakrishnan.

The company expects revenue in the range of Rs 7,311- Rs 7,382 crore for the quarter ending June 30, 2011, and in the range of Rs 31,727- Rs 32,270 crore for the financial year FY'12.

For the year ended March 31, the IT bellwether posted a consolidated net profit of Rs 6,823 crore, up nearly 10% over the year-ago period.

During the fiscal, income from software services, products and business process management rose to Rs 27,501 crore from Rs 22,742 crore in the previous fiscal (2009-10).

"We have realigned our strategic focus to enable our clients to build their enterprises of tomorrow. We continue to make investments towards strengthening our transformational, operational and innovation capabilities," Infosys Chief Operating Officer SD Shibulal said.

Meanwhile, TV Mohandas Pai, Director HR, has resigned from the board of the company with effect from June 11.

Infosys, which has Goldman Sachs, BT Group and BP Plc among its clients, added 34 clients during the quarter.

At the end of March 31, the company had 1,30,820 employees, which includes a gross addition of 8,930 staff during the fourth quarter. 

Mohandas Pai quits!!!

The most visible face of Infosys Technologies and one of its key people, T V Mohandas Pai, has quit possibly because he saw no possibility of getting the top job. With S D Shibulal expected to be named CEO later this month, Pai seems to have decided to call it quits to pursue broader interests, especially in higher education.

Pai should have been in line for the COO's post but the prospect of waiting out Shibulal's term with no guarantee that he would be elevated in his mid-50 s to the CEO's post might have been the trigger for the decision.

However, both Pai and Infosys chairman Narayana Murthy denied that he was quitting because he wasn't getting the CEO's post. Pai, in fact, said that Murthy had offered him the job nine months ago. Nonetheless, exits at the very top (Wipro and MindTree come to mind) show that Indian IT firms are in a churn as they try to realign to newer dynamics.

Pai has requested the company to relieve him after the annual general meeting on June 11. His exit couldn't have come at a worse time, as Infosys is going through a phase of slow growth with competitors snapping at its heels, a major restructuring, and leadership challenges.

Pai, a board member headed administration, education and research, human resources and Infosys Leadership Institute. Critically, he was Bangalore's Inc's link with the city, championing citizens' causes. A natural speaker and number cruncher, he was the public pundit for issues ranging from IT's impact on urban infrastructure to saving the parks.

Pai (51) admitted he was devastated to be leaving Infosys . "It's a very painful decision but not a rapid one. I have been thinking about it the last year. I have discussed it with Murthy some nine months ago and he asked me if I aspired to become the CEO, for which I said no. I have been doing the same job here in the last five years.

Infosys is now moving onto a 3.0 version of growth and it requires a new set of leaders, nimble feet, sharper focus and more strength. Companies should keep on changing their DNA including the leadership."

Here-in lies the nub of the conflict that might have precipitated Pai's departure from Infosys where he spent 17 years. If the company needs a nimble, new management, Infosys, by choosing the tried, tested and older Shibulal (55) might not be heading in the direction Pai would want it to navigate. Especially in a market where it's on the backfoot.

On his future plans, Pai clarified: "I have no desire to join politics, neither I have any invitation from Nandan Nilekani (head of government's unique ID project) to join him. I will be working on the higher education space. I will be on the board of many universities and some corporates . There is quite a lot of job to be done in this space."

There's widespread speculation that Pai and Shibulal didn't see eye-to eye. Pai denied any strife with him or others in the management team. "We have had our differences of opinion which is normal in the course of business but nothing serious. I have seen the company grow from day one.

Today when I look back, I feel proud to have been part of this journey but now I will be part of this company's growth as a shareholder . And I might even ask some questions," he said with a chuckle.


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