Infosys Technologies Ltd
) reported second quarter fiscal 2014 earnings per ADS from
continuing operations of 67 cents, missing the Zacks Consensus
Estimate of 70 cents by 4.3%. Quarterly earnings were down 10.7%
year over year and 8.2% sequentially. Despite reviving macro
economic trends, weakness in currency affected the second quarter
During the quarter, total revenue for the quarter was $2.1
billion, up 15.0% year over year and 3.8% sequentially. The
company witnessed volume growth, client additions, five large
deal wins and increased sales momentum in its big data and cloud
Infosys was also recognized as the Major Player in its IDC
MarketScape for Cloud Professional Services, by IDC. During the
quarter, the company added 68 clients in total.
Infosys continues to strengthen its expertise and competencies
) practices. During the reported quarter, Infosys was rated as
the leader in Gartner's Magic Quadrant for Oracle Application
Implementation and Application Management Services, and for SAP
Application Management services.
This apart, its co-founder Narayana Murthy who joined the
company in Jun 2013, outlined some strategies to bring the
company back on its profit making track. The initiatives set by
the Murthy primarily focused on winning large deals while
maintaining the market share. Second, he focussed on addressing
the high costs of the company through a cost optimization
strategy. Murthy also emphasized improving employee morale
through efficient rewards.
Revenue by Geographical Segment
During the reported quarter, Infosys reported strong
year-over-year growth in geographic revenues. Revenues from North
America grew 61.5% followed by Europe where revenues increased
24%. Coming next in the line is Rest of World with revenuegrowth
of 12.1% followed by India with 2.4% growth.
Revenues by Industry Segment
Revenues in the Insurance, Banking and Financial services
(IBFS) grew 33.4% while Manufacturing segment (MFG) revenues grew
23.2%. Revenues from the Retail and Life Sciences division (RCL)
grew 24.2% while revenues in Energy, Utilities, Communications
& Services (ECS) grew 19.2% year over year.
The company recorded an operating profit of $451 million
compared to $472 million in the prior-year quarter, reflecting a
decline of 4.4% year over year. The operating margin also
contracted 504 basis points year over year to 21.8% from 26.7% in
the comparable prior-year quarter. The decline in margin was
largely due to the currency volatility. During the reported
quarter, the Rupee depreciated by 11%.
Net profit after tax was $383 million for the quarter, down
11.1% year over year and 8.4% sequentially.
Infosys maintains a strong liquidity position and had cash
& cash equivalents of $4.3 billion as of Sep 30, 2013
compared to $4.1 billion as of Jun 30, 2013.
Concurrent with the earnings release, management revised its
revenue outlook for fiscal 2014. Revenues are expected to
increase in the range of 9% to 10% against 6% to 10% mentioned
Infosys currently has a short-term Zacks Rank #3 (Hold).
However, another company
EPAM Systems, Inc.
) operating in the same industry, currently holds a Zacks Rank #2
EPAM SYSTEMS (EPAM): Free Stock Analysis
INFOSYS LTD (INFY): Free Stock Analysis
ORACLE CORP (ORCL): Free Stock Analysis
SAP AG ADR (SAP): Free Stock Analysis Report
To read this article on Zacks.com click here.