Infosys meets forecasts, names new CEO


Infosys is India's number-two software exporter

By CNN's Kristie Lu Stout in Hong Kong

MUMBAI, India (CNN) -- Indian software giant Infosys on Thursday reported a 24 percent lift in net profits from the previous year, meeting analyst expectations.

But the company's profit hike does not necessarily mean that the worst is over for India's software firms after a double blow of war and recession in the U.S. -- the sector's largest export market.

Infosys, the country's number-two software exporter after Wipro, also named a new CEO to replace its high-profile chief, N.R. Narayana Murthy.

September shockwaves

The Indian software house reported a net profit of $41.6 million for the October-December period, the first full reporting period since the September terror attacks on the United States.

Immediately after September 11, shares in Infosys, Wipro, NIIT and Satyam Computer fell to bargain bin levels on fears of plunging confidence and demand in the United States.

The U.S. accounts for 60 percent of India's total software exports.

Intense sales pressure was also felt since the attacks, prompting India's software trade body NASSCOM (National Association of Software Services Companies) to slash export growth forecasts for the year to 30 percent.

Though client visits have resumed since September 11, Infosys is still far away from its heady days of 85 percent annual growth it achieved the previous five years.

Infosys is forecasting revenue to grow by merely 30 percent this fiscal year.

Uncertainty looms

In a statement, the CEO of the company said that short-term business uncertainties remained and the long-term outlook was cautious.

Infosys said sales volume grew last quarter 3.4 percent over the preceding quarter, but prices fell 3.4 percent.

It also added 33 new companies to its client list during the latest reporting period, in contrast to 28 the quarter previous.

Nandan M. Nilekani, the current managing director, president and chief operating officer at Infosys, will take the CEO post starting March 13.

Nilekani is one of the original six co-founders of Infosys, as well as a NASSCOM co-founder.

Outgoing chief Murthy will remain as the company's board chairman and will assume the new posts of Chairman and Chief Mentor.

After the results announcement, shares in Infosys tumbled as much as 5.5 percent in mid-day trade on Thursday at the Mumbai Stock Exchange.

Analysts had advised profit taking during the recent rally in Indian software shares, which they believed to have already reflected the possible good news of a sector-wide rebound.