Markets and Industry Roundup - week ending May 1, 2009

Markets Roundup:

• Markets closed higher during the week despite profit taking and end-of-the-month squaring of positions
• Week began with the news of an outbreak of swine flu which gave investors an excuse to turn cautious
• Factory orders for March declined 0.9%, worse than the 0.6% decline that was widely expected
• ISM Manufacturing Index for April showed continued contraction at 40.1, though better than 38.4 that was expected, and was also up from 36.3 in March
• Personal consumption climbed 2.2% after dropping 4.3% in the fourth quarter
• GDP report indicated that U.S. economy fell 6.1% in the first quarter as against an expected fall of 4.7%. The economy contracted at a 6.3% in the fourth quarter. GDP has now fallen in three consecutive quarters. That hasn't happened in 34 years, since the third quarter of 1974 through the first quarter of 1975.
• Hope for an economic recovery in the second half of this year helped prop up oil prices
• Banks came under pressure as investors became a bit skittish after hearing that results from the government's bank stress tests won't be released until May 7, which is later than the May 4 release that was originally planned. Rumours suggest that the government's findings are not entirely positive
• Federal Reserve left short-term interest rates at a record low and said the pace of economic contraction appears to be somewhat slower
• Some of the selling in the week was tied to Chrysler's bankruptcy filing, which was no surprise but served as a reminder that many companies remain in trouble

Industry Roundup:

• Tech services sector stocks were up 6% during the week
• IBM declared quarterly dividend of $0.55 per common share, an increase of 10% from last quarter. IBM has increased its quarterly dividend by 175 % since 2006. This is the 14th year in a row that IBM has increased its quarterly cash dividend. With this payment, IBM will have paid consecutive quarterly dividends every year since 1916.
• IBM authorized $3 billion in additional funds for use in the company’s stock repurchase program. IBM said it will repurchase shares on the open market or in private transactions from time to time, depending on market conditions. This is in addition to approximately $3.7 billion remaining at the end of March from a prior authorization.
• ABC Brazil Bank has signed an agreement with IBM in Brazil to implement a scalable modular datacenter, following Information Infrastructure best practices.
• Amway GmbH and IBM announced they have renewed and expanded a €3.2 million outsourcing contract for three additional years. The expanded agreement provides an on demand model that enables Amway to flexibly adjust its use of IT resources to meet its business requirements
• IBM and Atkins, a design and engineering consultancy group in the UK, announced a £14.4 million five-year managed data storage transformation agreement. The IBM solution will put in place the infrastructure and tools needed to manage the storage environment across the business.
• IBM announced the opening of a Healthcare Industry Solution Lab in Beijing, where IBM will work with hospitals and rural medical cooperatives to make healthcare "smarter" as the Chinese government enacts widespread healthcare reform.
• HP announced that Woolworths, Australia’s largest retailer and second-largest private employer, has chosen the HP Neoview enterprise data warehousing platform, along with HP consulting services, to increase operational efficiencies and improve insight into store operations.
• EDS, an HP company, signed an agreement with Continental Airlines to enhance its EDS Flight Planning Services in order to reduce flight operating expenses and create efficiencies for Continental by automating some aspects of flight planning.
• Accenture has been awarded a three-year consulting and IT services contract by Carlsberg, Copenhagen. Under the contract, Accenture will provide Carlsberg with management consulting, systems integration, application development, application maintenance and program management services in Europe.
• ACS announced a 10-year extension to its exclusive agreement with TravelCenters of America LLC for truck stop scanning and document delivery services
• ACS reported its fiscal third-quarter results - Revenues of $1.6 billion, up by 5% as compared with $1.5 billion in the third quarter of the previous year; Net income was $93.2 million or $0.95 per diluted share, up 13% as compared with $82.6 million or $0.85 per diluted share in the third quarter of last year
• Infosys and The Co-operative Financial Services (CFS), part of The Co-operative Group, the UK's largest consumer co-operative, announced that CFS has chosen Finacle to power its business transformation initiative
• Infosys BPO ranked 4th in the annual survey 'FAO Enterprise Provider Bakers Dozen' undertaken by FAO Today for 2008. The survey ranks top companies in the domain of Enterprise Finance & Accounting outsourcing, on parameters of breadth of service, quality of service and deal size based on customer rating.
• Infosys has appointed KV Kamath, non-executive Chairman of ICICI Bank, India's second largest bank, as an additional director to the Infosys Board
• Wipro won a $50 million IT services contract from Unitech Wireless, pipping rivals including IBM, Tech Mahindra and TCS. Unitech Wireless, controlled by Norway’s biggest telecom company Telenor, has licences to provide telecom services in all of India’s 22 telecom circles, but is yet to start operations.
• Wipro decided to do away with the bonds, through which freshers paid a security deposit of Rs75,000 & agreed to work for a minimum of 15 months
• HCL Technologies Ltd has been named as one of Britain's Top Employers 2009 by CRF International along with IBM, McDonalds & The Co-Operative Group
• HCL Technologies announced that it has won a five-year contract from UTi Worldwide Inc, an international, non-asset-based supply chain services and solutions company. UTi has selected HCL as a strategic global partner for IT application & infrastructure operations, and management
• HCL BPO, a division of HCL Technologies, announced the signing of a five-year deal with a Britain-based water utilities client
• Syntel reported its Q1FY2009 results - Revenue for the quarter at $96.4 million, y/y decline of 7.9% and q/q decline of 2.1%; Net income was $27.3 million or $0.66 per diluted share, compared to $20.4 million or $0.49 per diluted share in the prior-year period.
• Patni reported its Q1FY2009 results - Revenue for the quarter was $156.4 million as against $176.4 million in the same period last year, down 11 per cent; net income of $18.1 million in the quarter, a decline over 17% over corresponding quarter last year
• Patni unveiled ‘Midflight Optimization’ offering for telcos, 70% of whom are having time & cost overruns in their ongoing BSS transformation programs & need mid-course correction. The solution will deliver mid-project correction savings of 30% of the entire transformation cost & expedite time to market by 25%
• Patni has been ranked as No. 1 ‘Green Innovative Information Technology Vendor’ by 2009 Black Book Top Green Outsourcing Vendors Survey
• Hexaware reported its Q1FY2009 results – Revenue for the quarter at $ 52.6 million, y/y decline of 21.5% q/q decline of 15%; Net income at $3.4 million, decline from $4.0 million made in same quarter last year
• Tech Mahindra announced its fourth quarter results - Revenues of Rs10.5bn (-7%qoq, +3%yoy); Net profit of Rs2.3bn (3.5%qoq, 5.3%yoy)
• The International Association of Outsourcing Professionals (IAOP) released the rankings for the fifth annual list of the world's leading service providers. Accenture and IBM were named to the top two positions for the second consecutive year in the Global Outsourcing 100. iGATE is 59 on the list.