The Telegraph
Since 1st March, 1999
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Analysts remain clueless

Mumbai, April 11: Infosys Technologies’ modest guidance for the year has taken analysts by surprise.

Embarrassed by their earlier forecasts, some analysts openly admitted that they went wrong and some, like leading foreign investment firm Credit Lyonnais Securities (CLSA), went forward and explained to their clients where they went wrong.

Others, like J P Morgan, stood their ground by merely stating, “To say that Infosys disappointed us on Thursday would be an understatement.”

Some of the research reports released in the aftermath of Infosys Technologies’ profit warning make for interesting reading.

CLSA, in a report titled ‘Pall of gloom’, says, “Continued pricing pressures as indicated by a 5 per cent quarter-on-quarter drop in rates in the fourth quarter and a further 2-3 per cent drop projected in fiscal 2003-04 took us by surprise. We had expected flat rates in the fourth quarter and a 1 per cent drop in quarter-on-quarter figures,” the analysts admitted.

“Against our two percentage points margin drop assumption for this fiscal, Infosys has projected a 4 percentage drop on account of pricing, currency appreciation,” CLSA added.

The report then talks about the several bright spots in Infosys’ performance during the quarter, like the 28 clients joining the list and 405 new projects bagged.

“Basically the problem with some of us is that we believe whatever the management is saying,” an analyst said in a very critical assessment of the role played by people of his tribe.

J P Morgan in a note to clients said, “We continue to find answers to several fundamental points. We want to address several key questions specific to the company as well as the industry, which we will do over the next few weeks.”

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