Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Indian IT services specialist Infosys (NAS: INFY) plunged 10% today after its full-year forecast disappointed Wall Street.
So what: Infosys' second-quarter results -- EPS of $0.75 on revenue of $1.8 billion -- managed to meet estimates, but downbeat guidance for the full year reinforces worries over weak IT spending. In fact, management expects full-year operating margins to decline about 200 basis points from a year earlier, triggering plenty of concern over Infosys' profitability going forward.
Now what: Management now sees full-year EPS of $2.97 on revenue of $7.34 billion, versus the average analyst estimate of $3.04 and $7.37 billion, respectively. "Global economic uncertainties continue to face the industry," said CEO S. D. Shibulal. "We have increased employee wages, used some of our cash in a transformational acquisition of a consulting business and enhanced our investment in R&D and solutions. These initiatives will position us well in the industry and provide a strong platform for future growth." With the stock now off about 30% from its 52-week highs and trading at a reasonable forward P/E of 13, contrarian Fools might even want to bet on that turnaround talk.
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The article Why Infosys Shares Sank originally appeared on Fool.com.
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