Wipro Profit Growth Slows on Technology Spending Cuts
Wipro Ltd., India's third-largest provider of software services, said third-quarter profit growth slowed, missing estimates, as customers reduced technology spending amid the global recession, Bloomberg reported.
Net income rose 8.7 percent to 8.98 billion rupees ($182.5 million) in the three months ended Dec. 31, from 8.26 billion rupees a year earlier, Bangalore-based Wipro said in a statement today. Profit missed the 9.8 billion rupee median estimate in a Bloomberg News survey of six analysts. Sales increased 25 percent to 65.4 billion rupees, slowing from 32 percent a year earlier.
Chairman Azim Premji is under pressure to cut prices as the deepening global recession hurts customers from Cisco Systems Inc. to Citigroup Inc. Premji may also find it harder to win orders overseas after a $1 billion fraud at Satyam Computer Services Ltd. and Wipro's disclosure of a World Bank ban on contracts to the company threatens to tarnish the image of India's software industry.
"I was afraid the U.S. recession will impact the margins for the IT sector and that there will be some pricing pressure," Pauli Laursen, who manages $260 million in emerging equities at Sydinvest Asset Management Denmark, said before the announcement. Laursen sold his holdings of Wipro and Indian software industry leader Tata Consultancy Services Ltd. two months ago.
Wipro, which manages computer networks, operates call centers and provides back-office support for clients including Cisco and Boeing Co., forecast global sales of $1.05 billion at its information-technology services business in the fourth quarter ending March 31. The Indian company also makes hydraulics equipment, light bulbs and soaps.