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Infosys Q4 Profit Meets View, Full-year Outlook Disappoints; Stock Falls

Indian software services firm Infosys Technologies Ltd (INFY: Quote, 500209, INFOSYSTCH) on Friday reported higher profit and revenue for the fourth quarter and issued a weak full year guidance, warning of challenges ahead amid a tough economy.

While earnings per share met analysts' consensus estimates, revenue fell short of view in what the company called "a very difficult quarter." The stock is plunging over 9 percent on the Bombay Stock Exchange.

Profit attributable to owners of the company increased to $463 million from $402 million. Earnings per American Depository Share or ADS grew to $0.81 from $0.70 in line with the company's guidance.

On average, 15 analysts polled by Thomson Reuters expected earnings of $0.81 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter increased to $1.771 billion from $1.602 billion, but slipped 1.9 percent from the previous quarter. Analysts expected revenues of $1.81 billion.

The company's Chief Financial Officer V. Balakrishnan said Infosys experienced "a very difficult quarter" and was able to deliver on earnings per share guidance due to its strong financial discipline and high quality growth. "The global currency market volatility continues to be a challenge for the industry," he added.

The Board of Directors recommended a final dividend of 22 rupee per ADS for fiscal 2012 and a special dividend of 10 rupee per ADS on account of completion of 10 years of Infosys BPO operations. This translates to final dividend of about $0.43 per ADS and special dividend of $0.20 per ADS.

Infosys and its subsidiaries added 52 clients during the quarter and had a net addition of 4,906 employees.

A major portion of the company's revenue is generated in the U.S. Infosys competes with Tata Consultancy Services Ltd. (532540: Quote), Wipro Ltd. (WIT: Quote) and Accenture Plc (ACN: Quote).

For the first quarter, Infosys expects to earn $0.73 per ADS, up 9 percent from last year. Revenues are expected to be in the range of $1.771 billion - $1.789 billion, which is an year-over-year improvement of 6 percent to 7.1 percent. Wall Street expects earnings of $0.76 per share on revenues of $1.87 billion.

Full-year earnings are expected to grow 4 percent to 5.7 pecrent from last year to a range of $3.12 - $3.17 per ADS. Revenues are estimated to rise 8 percent - 10 percent from last year, varying between $7.553 billion and $7.692 billion. Analysts expect full-year earnings of $3.25 per share and revenues of $7.96 billion.

S. D. Shibulal, CEO and Managing Director of the company, said, "The year ahead looks challenging for the IT services industry, with slow recovery in the global markets. We are executing on our Infosys 3.0 strategy which is meant to deliver high quality growth in the medium to long term. We are making investments and have put in place a structure to deliver on this strategy."

The stock is plunging over 9.09 percent on the BSE at 2,500 rupee.

INFY closed on the Nasdaq on Thursday at $56.77, up $0.30 or 0.53 percent, on a volume of 3.48 million shares.

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by RTT Staff Writer

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