Why Infosys Earnings Are Under Siegehttp://www.fool.com/investing/general/2013/07/11/why-infosys-earnings-are-under-siege.aspx Dan Caplinger
July 11, 2013
Infosys (NYSE: INFY) will release its quarterly earnings report next Monday, but investors are already skittish about how well the IT services company will be able to perform. In a sluggish environment for global economic growth generally and for IT spending in particular, the entire outsourcing and consulting industry has felt the pressure, and as a primary beneficiary of more positive trends in the industry over the years, Infosys is potentially vulnerable to a reversal in those trends.
Even under tough conditions, though, Infosys remains a leader in IT services, and the need for those services is only likely to increase in the long run. Does that make current weakness a buying opportunity? Let's take an early look at what's been happening with Infosys over the past quarter and what we're likely to see in its report.
Stats on Infosys
How will Infosys handle earnings headwinds?
Most of the damage for Infosys came at two important points during the quarter. After Infosys announced its previous-quarter earnings in mid-April, the stock plunged 20%, as the company missed its revenue estimates and gave guidance that led to the downgrades in earnings that we've seen. Growth of 6% to 10% in revenue might seem healthy, but for the emerging-market company, it's a severe slowdown that reflects the uncertainty in the global IT economy right now.
The second hit came late last month, when rival Accenture (NYSE: ACN) announced its own earnings weakness. For Accenture, IT consulting has become an increasingly important part of its overall business as it seeks to keep cashing in on the highly profitable opportunities in the space. But the company lowered its guidance for earnings by about 2% and reduced its revenue-growth guidanc