* Sees Q1 IT services business revenue $1.58 bln-$1.61 bln
* Q4 net profit 17.29 bln rupees vs 14.81 bln rupees year
* Economic uncertainty has crimped IT spending in U.S.,
(Adds context, company executive and analyst comments)
By Harichandan Arakali
BANGALORE, April 19 Wipro Ltd's
weaker-than-expected quarterly sales forecast highlighted a gap
in performance among India's four biggest IT exporters and a
still shaky recovery in client demand.
Wipro, India's third-largest software services provider,
joined No. 2 player Infosys Ltd in delivering tepid
revenue guidance, citing a delay in the closure of deals. The
forecasts contrast with a more bullish outlook issued by
industry leader Tata Consultancy Services (TCS) that
had raised expectations IT spending by clients in the United
States and Europe was improving.
"If Wipro had been able to make a recovery, then it would
have told you that there is a rising demand tide that is lifting
most of the boats," said Kuldeep Koul, an analyst at ICICI
Securities in Mumbai.
Wipro, whose customers include Apple Inc, projected
fiscal first-quarter revenue for its IT services business in a
range of $1.58 billion to $1.61 billion - a decline of 0.6
percent to a rise of 1.6 percent over the previous quarter.
Analysts had expected a rise of 1 to 4 percent.
A more sanguine TCS, which does not issue specific revenue
guidance, said it expects full-year revenue growth to beat the
forecast issued by the National Association of Software and
Services Companies (NASSCOM).
NASSCOM expects export growth in the fiscal year that
started this month of 12 to 14 percent, a figure widely used as
a proxy for overall industry growth. In the just-completed year,
export revenue in the $108 billion sector rose 10.2 percent.
Further ratcheting up what is already a competitive sector,
U.S.-listed Cognizant Technology Solutions Corp has
been steadily gaining market share.
"Very clearly Cognizant and TCS are going in one direction -
TCS is much ahead and then there's also HCL Technologies, and
Mahindra Satyam if you look at their last few quarters," said
Sudin Apte, CEO of Offshore Insights, an outsourcing advisory
firm based near Mumbai.
"The bottom line is that things have changed dramatically,
and what clients want, requirements, the account management, and
expectations on capabilities have all changed. In the new
environment some companies have adapted themselves and others
have not yet," Apte said.
Some of the deals that Wipro had expected to close in the
March quarter had been delayed to the current quarter, Suresh
Senapaty, Wipro's chief financial officer, told reporters.
"While we don't give a specific guidance and we're starting
the year with a little weaker guidance ... our expectation would
of course be that we'll do better in the current fiscal than
what we did last year," he said.
In another sign that a robust recovery in demand remains
elusive, U.S.-based IBM Corp, which employs roughly
100,000 people in India, on Thursday missed earnings estimates
as it struggled to close deals in the United States and Europe.
Last week, Infosys gave a full-year dollar-revenue growth
forecast of 6-10 percent. That dimmed investor hopes that it
will soon benefit from a strategic revamp aimed at boosting
revenue from software products and consultancy-led services. Its
shares plunged 21 percent.
On the other hand, TCS and HCL Technologies,
ranked fourth in the industry by revenue, both reported strong
results this week.
"The signals that are coming out from the results of
different companies are very different from each other," said
Gajendra Nagpal, CEO of Unicon Financial Intermediaries in New
Delhi. "But there are pockets of encouragement as far as
specific companies are concerned."
In its fourth quarter ended March 31, Wipro's consolidated
net profit rose 17 percent to 17.29 billion rupees ($320
million) from 14.81 billion rupees a year earlier, compared with
the 17 billion rupee average of 19 brokerage estimates according
to Thomson Reuters I/B/E/S.
Shares of Wipro did not trade on Friday because Indian
financial markets were closed for a public holiday.
(Aditional reporting by Prashant Mehra and Aradhana Aravindan
in MUMBAI; Writing by Tony Munroe; Editing by Chris Gallagher)