Should India's most glamorous Tech company stop giving out a quarterly guidance, well the signs are pretty obvious. On July 12 for the first time in the history of Infosys the company stopped short of diving out a quarterly earnings guidance. This however did not come as a surprise to analysts and fund managers who track this company closely. Critics have over the last couple of years argued the diminished ability of the company to predict the future accurately and this coupled with its inflexible attitude towards the new market dynamics has started to hurt growth prospects significantly.
QUARTERLY GUIDANCE BEING MISSED CONSISTENTLY
For 2 straight quarters Infosys has missed its quarterly earnings guidance and during the preceeding 2 quarters the company narrowly missed the lower end of the guidance range. So it was no surprise when the top management announced that it was for the time being going to stop the practice of giving out a quarterly guidance but only put out an annual guidance. However one tends to wonder if for a company isn't it easier to predict the short term growth prospects rather than taking a long term view in an uncertain global environment such as what we are facing today.
ANNUAL GUIDANCE PRACTICE JUST A MATTER OF TIME ?
The Rupee has been an enigma for technology exporters who were found lacking in their ability to read into the currency market volatility and in turn piled on large hedge positions which in turn prohibited the tech companies to make windfall gains when the currency tanked dramatically. This coupled with the Euro's steep drop vs US Dollar and cross currency movements have significantly eroded the margins of IT companies in last one year. The ongoing European crisis, erractic recovery in the US and slowdown in developing economies are just some of the problems that today's export linked companies have to grapple with. In this scenario the probability of not only companies but entire countries going defunct is a genuine threat. Perhaps the company would be better off not trying to predict the future and thereby reducing the severeity of the onslaught on the stock everytime it misses its guidance.
TRACK RECORD PROVES IT
Q1'FY13 RESULTS
Q2FY13 GUIDANCE: NO GUIDANCE
Q1'FY13 ACTUALS
Revenue at $1,752 million (Missed the lower end of range)
FY13 GUIDANCERevenues are expected to be at least $7.343bn; YoY growth of 5.0% (6% in constant currency terms)
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Q4'FY12 RESULTS
Q1'FY13 GUIDANCE
Revenues seen at $1,771 million and $1,789 million; YoY growth of 6.0% to 7.1%
Q4FY12 ACTUALS
Revenues at $1,771 million (Missed the lower end of the range)
FY13 GUIDANCERevenues are expected to be in the range of $7,553 million and $7,692 million; YoY growth of 8.0% to 10.0%
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Q3FY12 RESULTS
Q4'FY12 GUIDANCE
Revenues seen at $1,806 million and $1,810 million; YoY growth of 12.7% to 13.0%
Q3'FY12 ACTUALS
Revenues at $1,806 million (Narrowly above the lower end of the guidance)
FY12 GUIDANCERevenues are expected to be in the range of $7,029 million and $7,033 million; YoY growth of 16.4%
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Q2FY12 RESULTS
Q3FY12 GUIDANCE
Revenues seen at $1,802 million and $1,840 million; YoY growth of 13.7% to 16.1%
Q2FY12 ACTUALS
Revenues at $1,746 million (Marginally above the lower end of guidance)
FY12 GUIDANCERevenues are expected to be in the range of $7.13 billion and $7.25 billion; YoY growth of 18% to 20%
QUARTERLY GUIDANCE BEING MISSED CONSISTENTLY
For 2 straight quarters Infosys has missed its quarterly earnings guidance and during the preceeding 2 quarters the company narrowly missed the lower end of the guidance range. So it was no surprise when the top management announced that it was for the time being going to stop the practice of giving out a quarterly guidance but only put out an annual guidance. However one tends to wonder if for a company isn't it easier to predict the short term growth prospects rather than taking a long term view in an uncertain global environment such as what we are facing today.
ANNUAL GUIDANCE PRACTICE JUST A MATTER OF TIME ?
The Rupee has been an enigma for technology exporters who were found lacking in their ability to read into the currency market volatility and in turn piled on large hedge positions which in turn prohibited the tech companies to make windfall gains when the currency tanked dramatically. This coupled with the Euro's steep drop vs US Dollar and cross currency movements have significantly eroded the margins of IT companies in last one year. The ongoing European crisis, erractic recovery in the US and slowdown in developing economies are just some of the problems that today's export linked companies have to grapple with. In this scenario the probability of not only companies but entire countries going defunct is a genuine threat. Perhaps the company would be better off not trying to predict the future and thereby reducing the severeity of the onslaught on the stock everytime it misses its guidance.
TRACK RECORD PROVES IT
Q1'FY13 RESULTS
Q2FY13 GUIDANCE: NO GUIDANCE
Q1'FY13 ACTUALS
Revenue at $1,752 million (Missed the lower end of range)
FY13 GUIDANCERevenues are expected to be at least $7.343bn; YoY growth of 5.0% (6% in constant currency terms)
------------------
Q4'FY12 RESULTS
Q1'FY13 GUIDANCE
Revenues seen at $1,771 million and $1,789 million; YoY growth of 6.0% to 7.1%
Q4FY12 ACTUALS
Revenues at $1,771 million (Missed the lower end of the range)
FY13 GUIDANCERevenues are expected to be in the range of $7,553 million and $7,692 million; YoY growth of 8.0% to 10.0%
-----------------
Q3FY12 RESULTS
Q4'FY12 GUIDANCE
Revenues seen at $1,806 million and $1,810 million; YoY growth of 12.7% to 13.0%
Q3'FY12 ACTUALS
Revenues at $1,806 million (Narrowly above the lower end of the guidance)
FY12 GUIDANCERevenues are expected to be in the range of $7,029 million and $7,033 million; YoY growth of 16.4%
-------------------
Q2FY12 RESULTS
Q3FY12 GUIDANCE
Revenues seen at $1,802 million and $1,840 million; YoY growth of 13.7% to 16.1%
Q2FY12 ACTUALS
Revenues at $1,746 million (Marginally above the lower end of guidance)
FY12 GUIDANCERevenues are expected to be in the range of $7.13 billion and $7.25 billion; YoY growth of 18% to 20%
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