Wipro net rises, guidance flat

The country’s third-largest software firm, Wipro, beat its own guidance and outperformed market forecasts to post a 12% rise in net profit at Rs 1,016 crore for the quarter ended June 30, compared with the same quarter last fiscal. This is in line with its two bigger rivals, TCS and Infosys, whose quarterly numbers also surpassed market expectations.

The company’s revenue stood at Rs 6,274 crore, up 5% year-on-year, but down 2.7% sequentially, according to Indian GAAP. However, net profit was marginally up sequentially at 0.6%. Revenues from IT services, which accounted for over two-thirds, were at Rs 4,825 crore, an increase of 10% y-o-y, but down 2.2% sequentially. In dollar terms, Wipro’s IT revenues stood at $1,033 million.

The company attributed growth in the quarter to deals won in India and the Middle East.

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Raju:funds were given to Maytas

The Satyam Computer Services fraud grows murkier. According to police sources,former chairman B Ramalinga Raju has now confessed that he diverted Satyam funds to family-owned Maytas Infra and Maytas Properties since 2004. The two had earlier denied receiving any funds from Satyam.

The latest admission intensifies pressure on the reconstituted board to contain the damage, given that clients have threatened to ditch the be leaguered company. “Two large customers have given us notice on leaving.But there are others and many of them have indicated that they would like to renew and expand their contracts,” said Satyam board member Kiran Karnik.

On Thursday and Friday, the board will hear presentations on a potential buyout by a clutch of suitors. L&T is seen as the front runner in the race. Others, including IBM and HP, are also said to be in the reckoning.

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Nortel bankruptcy to have little impact on Information Technology vendors

Indian IT industry’s Big Three—TCS, Infosys and Wipro—put up a brave front on Thursday after North America’s largest telephone equipment firm, Nortel Networks, filed for Chapter 11 bankruptcy a day earlier. Though Nortel is a major client of all three firms, its contribution to their revenues is not significant.

However, at a time when the IT sector faces slower business growth, coupled with fallout from the Satyam accounting fraud and World Bank ban, the market reacted nervously. Infosys closed down 4% at Rs 1,252.05 on the BSE on Thursday, Wipro plunged 3.5% to close at a low of Rs 235.30 and TCS was down 5% at Rs 510. Shares of Sasken Technologies, in which Nortel has a 9.5% stake, was most severely hit, sliding 19% at Rs 43.75.

According to the bankruptcy statement filed by Nortel, Infosys and TCS had receivables of $2.9 million each from the company, while for Wipro,the figures too dat$3.1 million.

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Firing up Tech Factories

For a while, India has been the preferred offshoring destination for software and services and Chi na the manufacturing king. This neat division is beginning to blur now. Leading telcos like Nokia, Motorola, LG, Samsung and Ericsson have set up manufacturing plants in the last couple of years. Many of them have attracted their component suppliers to set up facilities here. Seven out of the top 10 worldwide electronics manufacturing services (EMS) players including Foxconn, Flextronics and Jabil Circuits have set up their manufacturing facilities. PC bigwigs like HP, Lenovo, Dell, Acer, HCL, Wipro and Zenith already have their assembly lines here.

Take Nokia facility in Chennai, for instance. It showcases Indian IT and electronic hardware manufacturing prowess. Nokia’s factory in Chennai is among the largest, employing 40,000 people and houses close to 10 component vendors for mobile handsets in the same park.

Nokia exports about 70% of its production, according to industry estimates. The factory has a total production base of 5 lakh cellphones per day. Story at other telecom bigwigs like Motorola, LG, Samsung and Ericsson is not very different.

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