Wipro first quarter profit rises 31 percent, lags expectations

Wipro Ltd, India's third-largest exporter of software, on July 22 reported a lower-than-expected 31 percent rise in quarterly net profit as margins were hurt by higher costs and the rupee's appreciation.
Bangalore-based Wipro, which develops software for telecommunications and microchips, said revenue from its key global IT services business would rise 5.9 percent to $422 million in its fiscal second quarter to September, from $398.5 million in April-June.
Wipro said consolidated net profit according to US accounting standards for the quarter ended June was 4.27 billion rupees ($99 million) compared with 3.25 billion rupees a year ago. The company is also listed in New York.
Its earnings were below a median estimate of 4.49 billion rupees in a Reuters poll of 10 analysts.
Total revenue rose to 22.9 billion rupees from 17.7 billion in the year-ago period and compared with a median forecast of 23.04 billion rupees.
Wipro, which does not give full-year guidance and restricts estimates to quarterly global software export revenue, said it added 29 new customers in the first quarter, and hired 2,097 IT services staff to take its work-force to 41,911.
Wipro counts telecoms gear makers such as Cisco among key clients. It reported results after industry leaders Tata Consultancy and Infosys and No 4 player Satyam missed analyst forecasts, while global rival IBM beat estimates, aided by services from low-cost India.
New contracts for Wipro included an order worth about 25 million pounds from UK's Northern Gas Networks.
Shares of Wipro, which also has minor interests in hardware and consumer goods like soaps, have risen 38 percent from their year's low, lagging Bombay's information technology index that has risen 49 percent from its yearly low.
Wipro surprised markets in April with a one-for-one bonus share issue on top of expected earnings, but earlier this month, the market mood sobered as the company lost its US-based vice-chairman Vivek Paul to private equity firm Texas Pacific Group.
Paul, who will stay on until the end of September, heads the Global Information Technology unit, which accounts for about 75 percent of the company's revenue. Analysts said his departure would likely not have a significant long-term impact, but some said his absence could affect its ability to win some deals in the short-term.
Wipro's back-office services unit hit by slow growth and staff attrition has also been a drag on the company.