IT Scan

October 16, 2002
IT industry prospects looking up

NEW DELHI -- Information Technology services and software major Infosys Technologies have given a good result in the second quarter for the financial year 2002-03 with a 35.29 per cent increase in revenues and a rise in earnings expected in the third quarter.

With yet another software major announcing better results for the second quarter, the sentiment fin the stock market for technology stocks has gone up. Hughes Software and Systems said that there has been a 32 per cent rise in net profits over the comparable quarter last year.

Both Infosys and Hughes as well as several other IT companies had announced disappointing results in the first quarter. This had at that time hit the sentiment in the stock exchanges for technology stocks. This was considered inevitable in the generally depressed market conditions and the US downturn. In that context analysts believe that the second quarter results with their better performance could mean a break through in the continued bear sentiment in the market for technology stocks that had led the boom at the turn of the century.

Results for half year ending September 30 also show that Infosys has done well. Income growth is 30.22 per over the half-year ending in 2001. Operating profit after interest, depreciation and amortization rose by 20.36 per cent and net profit by 13.03 per cent for the half-year. While the earnings per share for the second quarter rose by 11.55 per cent against 4. 44 per cent in the previous quarter and the half yearly results showed a growth of 12.46 per cent.

The good news from Infosys is that it has succeeded in getting 18 new clients even in these depressed conditions including Porsche AG, Commonwealth Industries, Arrow Electronics and Vcommerce Corporation. There has been a net addition of 1,806 employees for the quarter.

Hughes Software said that net profits rose to Rs, 8.3 crores compared to 6.3 crores for the same period last year, The company added 11 new customers like Acterna, ETRI, Innoace, Intracom etc. It also saw expansion of its relationship with Nokia, NEC and repeat orders from JCI, SS8 and Leapstone.

In the face of US downturn Indian IT companies whose major market is in the US, are taking aggressie steps to diversify into other geographies, gain OEM contracts and resist pressure to lower prices. The fact that the industry leaders are recruiting more staff is also considered a sign of better times ahead after nearly two years of depressed market.