Infosys (INFY) Down after Results

Shares of Infosys Ltd. (NASDAQ:INFY) are plunging over 13% in morning trade after the company reported fiscal Q4 revenue below analyst estimates. The company also said that results for the current quarter and the full year will miss analyst forecasts.

Infosys (INFY) said revenue in the three months ended in March rose 10.5%, year over year, to $1.77 billion, this missed consensus forecasts by 4 cents a share. The company reported profits of 81 cents per share in line with analyst forecasts.

The company said it now expects revenue for its current quarter in a range of $1.77 billion to $1.79 billion. This is well below the consensus forecast of $1.85 billion. Earnings per share is now expected at 73 cents, 3 cents below analyst forecasts. For the full year the company sees revenue in a range of $7.55 billion to $7.69 billion, and EPS in a range of $3.12 to $3.17 per share. This is below the consensus forecast of $7.79 billion and $3.32 per share.

“The year ahead looks challenging for the IT services industry, with slow recovery in the global markets,” said S. D. Shibulal, CEO and Managing Director. “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.”

Brian Marshall of ISI Group, today reiterated a Buy on the company’s stock, writing that Infosys is perhaps not selling the right kinds of services — too focused on “IT services” per se rather than consulting and other higher-value jobs.

“It’s a shocker,” said Ankita Somani, an analyst at Angel Broking Ltd. “The results are very bad, the guidance is very, very disappointing. They are guiding less than the rate at which the industry will grow.”

“I think Infosys’s business model is likely to face challenges from two fronts — their smaller, nimbler competitors like Cognizant who accept lower margins are getting better at delivery,” said Ankur Rudra, the top-ranked Infosys analyst, who rates Infosys sell at Ambit Capital Pvt. in Mumbai. “If Infosys wants the historical margins, it’s going to be difficult for them to grow in line with the industry.”

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.