Infosys

No poaching from Satyam: Infy

13 comments Written on January 9th, 2009 by
Categories: Infosys, Satyam
ET: Infy not to hire Satyam employees:
“We have asked our recruitment staff not to poach anybody from Satyam. The company is in the middle of a crisis and people will jump ship,” Infosys Technologies HR, education & research and administration director TV Mohandas Pai told ET. On Wednesday, Infosys had ruled out any possibility of taking over Satyam. “We will not touch such a tainted company,” Infosys founder and non-executive chairman N R Narayana Murthy had said.
You don't want the company, understandable. You don't want the employees? What kind of stupid logic is that?

The idea that by not hiring them will make the employees stick to Satyam is silly. If they want to leave, there's not much Infy can do to influence that choice. And if the industry gangs up against Satyam employees, won't it be a shame?

Those employees that couldn't have participated in the scam are free to go where they choose. By denying them a job, Infy is only shooting itself in the foot. The best of the Satyam stock will go to other companies, and there are indeed some excellent people in there.

Tomorrow there will be no Satyam. But there will be a memory of how Infy became an asshole. Those employees will remember.

But it might just be that Infy has no place for more employees anyhow. These are bad times, but it's inexcusable to make silly statements like we wont hire from Satyam. You will, you always have, and not doing so jeopardises only you. Loyalty cannot be forced on anyone. Infy will be wise to understand that early.

Update: Since Infy mentioned "poach" versus "hire", I must apologise for the heavy remark. Yet, having been in the circles, I know there is hardly a line between "poach" and "hire" - if you get a resume from a recruiter, does it amount to poaching? How do you know the recruiter - who gets one month's income as compensation - did not approach the employee first? How can you prove you didn't poach? The obvious answer: you cannot. Even if you ask the employee he'll say no, I didn't get poached; he wants the Infy job. So what happens? If the dictat is rigid, Infy HR will not hire anyone from Satyam. If it's not rigid then this is all false posturing anyhow. Either ways it does Infy no good.

Posted in Infosys, Satyam

Infy bags Axon for 3300 cr.

No Comments » Written on August 25th, 2008 by
Categories: Infosys
Infy news: it has just bought Axon group for Rs. 3,300 cr. Axon is listed in the UK, and makes about Rs. 160 cr. (Rs. 20 billion) a year in net profit.

For Infy, the EPS addition is about Rs. 3 per share. They will lose the interest/dividend income on the 3,300 cr. which at 7% comes to 230 cr. so net-net this deal will probably break even on EPS in the near term.

There might be synergies - moving work to India, consolidation of management and sales etc. But this is a pretty expensive deal - at a P/E of 20, they had better be growing like crazy. Axon has been doing well - as these figures show.

I thought they'd get a sweeter deal than a 20 P/E in a slowing economy, but I guess this is what it is. I'm not sure if this is positive - in the near term it surely isn't - but inorganic expansion is definitely a good thing.

Disclosure: No current positions

Posted in Infosys

Infosys Q1 09: Tough Outlook

No Comments » Written on July 13th, 2008 by
Categories: Infosys
Infy's results are out - well actually were out of Friday and the stock got beaten up both in India and the U.S. The stock was down 7% in India and 13% in the U.S. The USD Rupee rate was at 42.87 versus a 43.2 rate seen a day earlier.

  • EPS at 22.75. Growth was about 20%.
  • Projected EPS for the full FY is around 100. Next quarter is around 24.
  • Now this is all with the rupee at 43.04. What happens if rupee falls again? They have only $811 million as hedge (which is not even one quarter's revenue).
  • 27% of business comes from banking and financial services. Most of this must be in US/Europe. The banks and FIs there are, pardon my french, fubared. News as of now: IndyMac goes bust, Freddie and Fannie show signs of collapse, LEH is tottering on the brink, subprime mortgage resets raising their ugly head and a credit crisis of epic proportions in progress.

    The usual first thought is that outsourcing will increase. But if there's not enough business itself, what's the point? Even stuff like infrastructure management for banks - like maintenance of software and hardware - is going to be impacted as banks fire employees, cut costs, and lower targets. Efficiency is not a driver now - you need transaction volume to drive efficiency.

  • Dollar EPS growth is only 16%. If we assume the dollar will go back to Rs. 40 we will end up with about that much growth on INR. Assuming Rs. 95 or so as EPS going forward, and a 16 P/E, both of which I think are a little high, we still get a price of Rs. 1,520. Compare that to current price, after the steep fall, of Rs. 1,676.
  • They have 7400 cr. in cash, but that translates to only Rs. 130 per share, and is potentially the only thing that can get them to higher growth - if they acquire, acquire, acquire. Infy's been loathe to buy product based companies, or buy intermediaries where their revenues can be transaction based (rather than fee based). This is the time - stuff is cheap and going to get cheaper. In five years, any purchases made now will reap rewards. But you can't keep thinking of share prices in the interim - if they're going down, let them go down a few years; you can't live quarter to quarter.
  • Having said that I would rather not lose money on the stock, so I'd get out if I owned any shares. After it shows the drive, and after the stock starts to rebound or even cross its last highs of 2100+, maybe then it's worth a dekho.
  • If you think about it, other IT companies that have lesser cash should be impacted MUCH more than Infy, if they haven't been hammered yet.
Disclosure: No positions, but we may end up taking some if our systems say so. I have very few discretionary positions on - Infy isn't one of them - the rest are system determined and they react to prices, so I can't predict if I will have a position.

Posted in Infosys

Infy Q4-2008 results are out.

1 Comment » Written on April 15th, 2008 by
Categories: Infosys, Stocks
Infy Q4 2008 results are out.

Sales are 4235 cr. (up from 3555 cr. last year same quarter, nearly 20% up). A QOQ increase of around 5%.

Net Profit is 1182 cr. (up from 1124 cr. last year, a 5% increase). QoQ the profit has been stagnant - last quarter was 1186 cr.

EPS has gone up to 20.66, from 19.96, which is a 3% increase or thereabouts. If you're wondering why profit growth is greater than EPS growth, it means further dilution has happened due to more shares issued, which is through ESOPS in this case. Diluted EPS has actually grown around 5%, from 19.61 to 20.60.

Consolidated results: Sales 4542 cr. (up about 22% from 3772 cr. last year), Net Profit 1249 cr. (from 1144 cr., a 10% increase) and EPS up to 21.78 from 19.95, a 4% increase.

I would think this is fairly low, and initially I thought it was under the guidance of Rs. 21.38 per share but I was looking at standalone results. At a consolidated level they have beaten the guidance by a bit, but still, the picture is not impressive.

EPS for the year is Rs. 81.26, up from 67.59 last year. That's around 20.22% growth.

At current prices of 1420 the P/E is 17.47. That may sound low, but let's look at their guidance before we decide. More to come.

Posted in Infosys, Stocks

Newer Entries »