IGate says reasonable sequential growth in Q4 unlikely
SOURCE: Reuters
DATE: Oct 17th, 2008
ARTICLE
IGate Corp, a provider of information technology and outsourcing services, posted third-quarter earnings that topped market estimates on improved gross profit margin, but said reasonable sequential growth for the fourth quarter was unlikely.
Revenue for the third quarter rose 10 percent from a year ago, but slumped 31 percent on a sequential basis.
IGate shares fell as much as 17 percent to a low of $5.08, but pared some losses to trade down 54 cents at $5.58 in noon trade on Nasdaq.
“We focused on margin growth because we felt that market environment was a little challenging from revenue growth perspective,” Chief Executive Phaneesh Murthy told Reuters.
IGate, which competes with India’s Infosys Technologies Ltd and Wipro, said it has seen cutbacks in projects and would continue to focus on margin growth.
“The market environment is not the most conducive to look at any significant sequential growth in the fourth quarter,” Murthy said.
IGate added seven new customers in the third quarter, of which only two were in the financial services vertical while most of the others were from manufacturing. Financial services accounted for half of its revenue in the quarter.
For the third quarter, the company reported earnings of $8.3 million, or 15 cents a share, compared with $4.3 million, or 8 cents a share, in the year-ago period.
Revenue rose 10 percent to $55.4 million. Gross profit margin improved to 38.4 percent from 32.0 percent a year earlier, helped by increased utilization and a favorable exchange movement.
Analysts on average expected earnings of 14 cents a share, excluding special items, on revenue of $55.8 million, according to Reuters Estimates.
The company had reported revenue of $80 million in the second quarter.
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