It's good to know that shares of Sify (Nasdaq: SIFY) don't always have to head lower.
Gravity was given the day off yesterday, as shares of the corporate communications specialist in India soared 18% higher after Sify struck a deal with Google's (Nasdaq: GOOG) suite of Web-based software solutions.
Google Apps, the popular collection of cloud computing programs that includes everything from email to spreadsheets to word processing, will be incorporated into Sify's portal.
Even after yesterday's run, Sify shares are still trading at roughly a third of where they were last October. It certainly doesn't help when you've missed Wall Street profit expectations in each of the past four quarters.
So what's going on here? With India being a quickly developing nation, second only to China in population, one would expect a Web connectivity specialist like Sify would be rolling in rupees. It's not.
Mumbai-based Rediff.com (Nasdaq: REDF), operator of the India Online portal, is also trading in the single digits, well off of last year's highs.
The obvious explanation is that the companies need to earn -- literally and figuratively -- the respect of investors. Both companies are coming off of disappointing quarters. Compare that to China's rising dot-com stars like Baidu.com (Nasdaq: BIDU) and Sohu.com.
Granted, the market has been weary of many Indian stocks in general. IT outsourcing heavies Infosys (Nasdaq: INFY), Satyam (NYSE: SAY), and Wipro (NYSE: WIT) aren't exactly tickling new highs these days. Then again, at least those companies can point to bottom-line growth in their latest quarters.
The Google Apps deal is nice, but all it does is get investors to mention Google and Sify in the same sentence. If Sify wants to keep the good gains rolling it will have to earn them.
Yes, literally and figuratively.
Other ways to travel to India:
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