India's Wipro eyes U.S. boost ahead after second quarter misses forecasts

[October 22, 2014]  By Aby Jose Koilparambil and Subrat Patnaik

BANGALORE (Reuters) - India's third-biggest software services firm Wipro Ltd narrowly missed market expectations with an eight percent rise in second-quarter profit, but said it saw a rosier end to the year as more confident U.S. clients increase spending.

For the quarter ended Sept. 30, Bangalore-based Wipro posted consolidated net profit of 20.85 billion rupees ($340.4 million). Analysts, on average, were expecting Wipro to make 21.09 billion rupees, according to Thomson Reuters I/B/E/S.

Total revenue rose to 118.16 billion rupees from 109.91 billion rupees in the same period last year.

"Overall the demand environment continues to hold steady. In North America we see discretionary spend returning," Chief Executive TK Kurien said.

He added the group saw opportunities in continental Europe, where outsourcing has yet to expand to U.S. levels.
 

Kurien was picked to lead the company more than three years ago by founder chairman Azim Premji, after Premji sacked joint CEOs Suresh Vaswani and Girish Paranjpe.

Wipro, however, has struggled to catch up with rivals like Tata Consultancy Services and Cognizant Technology. Peer Infosys has itself been hit by management changes over the last couple of years, but has reassured investors with a new chief executive.

On Wednesday, Wipro said it expects "headwinds" in some of the company's key accounts to continue till December this year.

"Infosys has now laid out their plans, so we know what the idea is. Wipro has talked about plans for some time, but it does not show on results," Ankita Somani, analyst with MSFL Research said.

Wipro said it expects revenues from its IT services business to be in the range of $ 1,808 million to $ 1,842 million in the current quarter. For thee quarter ended Sept., the unit saw revenues of s $1,771.5 million.

Shares in Wipro closed ahead of the results at 583.65 rupees on Wednesday in the Mumbai market.

(1 US dollar = 61.2300 Indian rupee)

(Additional reporting by Nivedita Bhattacharjee in MUMBAI; Editing by Clara Ferreira Marques)
 

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