Zacks Analyst Interview Highlights: Infosys, Wipro, Satyam, Cognizant and Patni

Business Wire, May 8, 2008

CHICAGO -- Zacks.com releases the latest Analyst Interview. Today's interview is with senior analyst Abdul Saleh, who discusses Infosys (Nasdaq: INFY), Wipro (NYSE: WIT), Satyam (NYSE: SAY), Cognizant (Nasdaq: CTSH) and Patni (NYSE: PTI).

A synopsis of today's Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.

Are growth trajectories for Indian business process outsourcing [BPO] companies still as strong as they were a year or two ago?

The forward revenue and EPS growth expectations are currently muted for these companies with consensus trending down. While the companies - Infosys (Nasdaq: INFY), Wipro (NYSE: WIT), Satyam (NYSE: SAY), Cognizant (Nasdaq: CTSH) and Patni (NYSE: PTI) - generally met and/or slightly exceeded revenue and earnings expectations for the latest reported quarter, forward revenue and earnings estimates have been revised downwards by an average of negative 2.4% and negative 3.3%, respectively. The price targets for these stocks have also been taken down correspondingly. Although these numbers do not, by any means, point to a meltdown of the group, the growth rates are not as robust as has been in the past.

What challenges are on the horizon for BPOs over the next couple quarters?

The basic challenges that currently face the group are two-fold: (a) sustainable growth, and (b) increased competition. Other near-term challenges include the strengthening Indian rupee and higher employee attrition rates, both of which may lead to constricting margins.

Given that growth for these companies are directly co-related to the U.S. domestic economic trends, a significant portion of the revenue stream comes from the U.S. For example, Wipro and Infosys derive over 60% of revenues from the U.S. markets. Hence, any slowdown in the U.S. IT outsourcing, particularly from India, is expected to weigh negatively on the growth trajectories of these companies, at least in the next quarter or two.

As a result, one may expect that the Indian BPOs will look more toward non-U.S. economies to maintain and/or increase their growth rates. The recent trend towards looking for meaningful acquisitions in Europe is an indicator of such a trend.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today by visiting http://at.zacks.com/?id=2679.

About Zacks

The performance of the Zacks Rank portfolios for annual and year-to-date periods are the linked monthly total returns (price changes dividends) of equal weighted hypothetical portfolios, consisting of those stocks with the indicated Zacks Rank, assuming monthly rebalancing and zero transaction costs. These are not the returns of actual portfolios. The hypothetical portfolios were created at the beginning of each month from January 1988 forward based on the values of the Zacks Rank available to Zacks' clients before the beginning of each month. The portfolios created monthly from 1988 through September 2006 exclude ADRs and are comprised of stocks that have the indicated Zacks Rank and were covered by at least two analysts at the time of the stocks inclusion in the portfolio. Starting in October 2006 and going forward, the portfolios are comprised of all stocks with the indicated Zacks Rank and do not exclude ADRs, which is more reflective of the list of stocks that customers will find on the Zacks web sites. These performance numbers have been audited from 1995 through 2003 by Virchow, Krause & Company, LLP.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.