Indian software services company Infosys Technologies Ltd. (INFY) on Friday said second quarter profit declined from the year-ago period, as per International Financial Reporting Standards or IFRS, as the company generated lower revenues in the just concluded period and incurred higher income tax rate. However, both earnings per share and revenues beat Wall Street expectation. Additionally, the company issued third-quarter earnings per share forecast exceeding Street view and lifted its fiscal year outlook. On the basis of Indian GAAP, net profit increased over 7% from last year.
On the IFRS basis, the company reported net profit of $317 million or $0.56 per equity share, down from $320 million or $0.56 per equity share in the same period last year. Infosys had earlier projected second-quarter earnings per ADS in the range of $0.50-$0.51. On average, 14 analysts polled by Thomson Reuters estimated the company to report earnings of $0.50 per share for the quarter. Analysts' estimates typically exclude special items.
The company's IFRS net income for the first quarter was $313 million, up from $308 million a year ago. On a per share basis, earnings rose to $0.55 from $0.54 in the previous year.
On an Indian GAAP basis, the company reported second-quarter net profit of Rs. 1,540 crore, up 7.5% from Rs. 1,432 crore reported last year. Earnings per share increased to Rs. 26.83 from Rs. 24.97 in the previous year.
IFRS revenues for the quarter were $1.154 billion, down 5.1% from $1.216 billion generated for the same period last year. The company's consolidated revenue projection was in a range of $1.11 billion-$1.13 billion.Analysts had estimated revenues of $1.12 billion for the quarter.
For the first quarter, the company had reported revenues under IFRS of $1.12 billion, lower than $1.16 billion reported in the prior year period.
On the basis of Indian GAAP, the company's second-quarter income from software services, products and business process management increased to Rs 5,585 crore from Rs 5,418 crore in the previous year.
Second-quarter income from software services and products increased to Rs 5,201 crore from Rs 5,066 crore in the same period last year.
Cost of revenues declined to $662 million from $691 million in the previous year, while total operating expenses dropped to $142 million from $164 million in the prior year. Income tax expense increased to $82 million from $56 million in the previous year.
The company also declared an interim dividend of Rs. 10 per share.
The company said it is sharpening focus on Research & Development, Intellectual Property-based solutions, and 'New Engagement Models' that offer flexible pricing and greater operational control and efficiency to clients.
Infosys noted that the global currency markets continue to be extremely volatile, even though it witnessed some stability in the rupee against the US dollar in the just concluded quarter.
Infosys and its subsidiaries added 35 clients during the quarter and had a gross addition of 6,069 employees. During the quarter, Infosys applied for four patents in India and the U.S.
According to S. Gopalakrishnan, CEO and Managing Director of the company, "In the second quarter, the business climate has improved.Clients are now looking to invest in a few strategic initiatives and relationships to maximize value from opportunities when the economic downturn ends."
For the six months of the fiscal, Infosys said its net profit edged up to $630 million or $1.10 per equity share from $628 million or $1.10 per equity share in the prior year. However, first-half revenues slipped to $2.276 billion from $2.371 billion in the same period last year.
Looking ahead, for the quarter ending December 31, the company expects consolidated earnings per ADS to be $0.50, down 13.8% from last year. Consolidated revenues are expected in the range of $1.155 billion-$1.165 billion. Analysts expect the company to earn $0.49 per share in the third quarter on revenues of $1.13 billion.
For the fiscal year ending March 31, 2010, the company said it now expects consolidated earnings per ADS in the range of $2.09-$2.10. Fiscal year consolidated revenues are estimated in the range of $4.60 billion-$4.62 billion. Analysts estimate the company to earn $2.04 per share for the fiscal on $4.53 billion revenues.
While issuing the first-quarter results, the company had revised fiscal 2010 earnings per ADS forecast to $1.97- $2.00, from prior range of $1.91-$2.00. Consolidated revenues were then anticipated to be between $4.45 billion and $4.52 billion, compared to the prior forecast of $4.35 billion-$4.52 billion.
Wipro Limited (WIT), Infosys' close competitor in the domestic market, is expected to announce second-quarter results later in the month.
INFY closed Thursday's regular trade at $49.48, up $0.93 or 1.92%, on 3.74 million shares. For the past year, the stock traded in the range of $21.10-$50.10.
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