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Wipro Q3 net up 11%, sees good momentum
Friday, January
18, 2008
Wipro Ltd, India's No 3 software services exporter, fell
short of expectations with an 11% percent rise in quarterly
profit on Friday, but said it will be able to mitigate the
impact of higher wages.
New York-listed Wipro, which counts telecoms gear makers Cisco
and Nortel among key clients, also said improved realisations
helped offset the effect of a firmer rupee.
"During the quarter, improved realisations and rationalisation
helped us fully mitigate the pressure on profitability on
account of foreign exchange impact," Chief Financial Officer
Suresh Senapaty said.
"We have seen an increase in the number of USD 50 million
clients and now have our first USD 100 million client."
Wipro said net profit rose to 8.26 billion rupees (USD 210
million) in its fiscal third quarter ended Dec 31 under US
accounting standards, up from 7.45 billion a year earlier.
Revenue grew 32% to 52.36 billion rupees from 39.64 billion,
helped by large outsourcing deals, including five multi-year,
multi-million dollar deals.
An poll had forecast a net profit of 8.65 billion rupees on
revenue of 52.78 billion for Wipro, which provides IT
solutions and services such as system integration, software
application development and maintenance and research services.
Wipro said it added 39 new clients during the quarter and
expects revenue from its global services business in the March
quarter to be about USD 955 million.
Comparatively lower wages and competent English-speaking
workers have helped Indian services firms grab outsourcing
deals from overseas firms, but a strong rupee, soaring
salaries and prospects of a US recession are worries.
Wipro and bigger rivals Tata Consultancy Services Ltd and
Infosys Technologies Ltd, which had both beaten expectations
and forecast strong growth, are rapidly expanding into Europe,
Asia Pacific and Latin America.
This will help reduce their dependence on the US market that
now provides more than half their revenue. A strong rupee,
which rose 12% against the US dollar in 2007, poses a risk to
software services firms that get over three-quarters of their
revenue from overseas.
Sector leader Tata Consultancy beat forecasts on Wednesday
with a 20.5% rise in quarterly profit and Infosys last week
posted a 25% rise and raised its full-year guidance.
Wipro, a diversified firm with interests in computer hardware
and consumer goods, also competes with foreign companies such
as IBM and Accenture in the outsourcing market.
Shares in Wipro rose 14.3% in the December quarter,
outperforming a 2.1% fall in the software services sector
index , but lagging a 17% rise in the main Mumbai index.
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