Markets and Industry Roundup - week ending May 8, 2009

Markets Roundup:

• Markets recorded another week of gains on more signs of economic stabilization
• Investors who were waiting on sidelines have started to invest, as March saw the biggest sequential inflow of funds into mutual fund assets since April 2003
• Government announced findings of its much awaited stress test on 19 major financial institutions and has instructed 10 institutions (Bank of America, Wells Fargo, GMAC, Citigroup, Morgan Stanley, Regions Financial, SunTrust Banks, KeyCorp, Fifth Third Bancorp, PNC Financial Services) to raise more capital
• The latest ADP Employment Report estimated that 491,000 jobs were cut from private payrolls in April, which isn't nearly as bad as the 645,000 job cuts that were expected. It is also down substantially from the 742,000 job losses recorded for the prior month.
• Government said non-farm payrolls shed 539,000 jobs in April, the fewest in six months and better than the expected decline of 600,000.
• Pending home sales for March advanced by a better-than-expected 3.2% month-over-month
• Construction spending in March increased 0.3% month-over-month, exceeding the 1.6% decrease that was expected
• ISM non-manufacturing index rose to 43.7 in April from 40.8 in March
• $14B auction of 30-year Treasury bonds was poorly received sending interest rates higher
• On the negative side however, several prior months were revised lower, and the unemployment rate jumped to 8.9% from 8.5%, as expected
• Oil prices continued to jump on the improving economic outlook
• Markets also took cue from the news that Asian stocks marched higher following word that several Asian finance ministers ordered an emergency liquidity fund of $120 billion to be pooled and that China's second quarter GDP is expected to outpace that of the first quarter

Industry Roundup:

• Tech services sector shares was up 1% during the week
• IBM announced the signing of a services agreement with Germany's Federal Employment Agency, Bundesagentur fur Arbeit (BA) to help the agency file, distribute, process and manage documents electronically
• IBM has been selected by Taiwan government to help build a Smart Taxation Service System. The project, is expected to deliver significant cost savings through improvements in taxation processes, service delivery and by building a more cost- and power-efficient data center
• IBM has been declared the leader for building innovation into large-scale outsourcing contracts as part of the Bathwick Services Index research, conducted by The Bathwick Group on prominent outsourcing vendors in Europe
• HP and Research In Motion have entered into a strategic alliance to deliver a portfolio of solutions for business mobility on the BlackBerry platform. The solutions, which include support for BlackBerry Enterprise Server 5.0, are focused on increasing service levels, reducing operations costs and improving productivity.
• EDS, a HP company, is reported to be close to buying Fidelity's India-based IT operations for $150 million plus a long-term outsourcing deal from Fidelity, the world's biggest mutual-fund company. IBM had the inside track earlier this year, and Infosys, which has 3,000 people on the Fidelity account, could lose one of its largest clients.
• Accenture received Global ISO 14001 Environment Management System certification from BSI for all its 53 locations around the world
• Accenture Insurance Claim Components Solution has received the top score for ‘overall customer satisfaction’ in the Average Customer Experience Rankings report, published by Novarica, an independent research & advisory company focused on technology strategy for financial services & insurance executives
• The U.S. Air Force has awarded CSC eight task orders to provide logistics and maintenance support to the U.S. Army Regional Aviation Sustainment Management. The task orders each have a one-year base period and a one-year option, and are collectively valued at $347 million.
• CSC announced that it has signed a new 10-year $90-million contract with Wilton Re, a provider of life insurance and re-insurance, to provide a full range of business process outsourcing services.
• ACS signed a 5-year, $84 million contract with Virginia Department of Medical Assistance to manage its Medicaid program
• ACS has been named Employer of the Year by Horizon Goodwill for working with Goodwill to recruit, hire and train people with disabilities and other employment barriers
• ACS said that BPO represented 95% of new deals; ACS, who currently maintains about 5,000 workers in India out of its total workforce of 74,000, also said that it aims to have 50% of employees in India (did not mention the time frame)
• Infosys was among the 17 Indian firms that figure among the top 50 in the 2009 Reputation Institute Global 200 list of the world's 200 most reputable companies published by Forbes. Italy-based chocolate producer Ferrero was ranked as the most reputable company and IKEA was the second.
• Cognizant reported first quarter 2009 results - Revenue of $746 million (+16% y/y; -1% q/q) as compared to $643 million in first quarter 2008; Net income and diluted EPS of $113 million and $0.38 in the quarter up from $102 million and $0.34 made in the same period last year; guides Q2 revenue of $760 million (+2% q/q) and full year revenue of $3.1 billion (+10% y/y)
• Cognizant has signed a global strategic partnership with Temenos, a global provider of integrated core banking systems, to significantly enhance its service and delivery capabilities for Temenos’ T24 Model Bank
• Perot reported first quarter 2009 results - Revenue of $621 million, a decrease of 9% year-to-year, over first quarter 2008 revenue of $680 million; Diluted EPS was $.24, an increase of 4% over first quarter 2008 diluted EPS of $.23; guides Q2 revenue of $620-635 million (+0-2% q/q) and diluted EPS of $0.23-0.25
• Swan Telecom, majorly owned by UAE-based Etisalat, has shortlisted Wipro, IBM and Tech Mahindra, for an outsourcing contract estimated at $505 million
• Genpact reported first quarter 2009 results – Revenue of $266 million, an increase of 13% from $235 million in the year-ago period (83% revenue from BPO and 17% from IT; GE contribution of 42% of revenue); net income rose to $30 million or $0.14 per share from $20 million or $0.09 per share in the previous year; guides 10-15% increase in revenue for full year compared to $1.05 billion of 2008
• WNS reported fourth quarter 2009 results – Revenue less repairs of $96 million, an increase of 27% from corresponding quarter last year; net income of $2.4 million compared to $6.1 million from the corresponding quarter last year
• Patni announced an Operational Fund Accounting Service designed to manage back-office functions for buy-side firms that ensure data consistency, accurate financial reporting, customer data security & privacy and freeing customers to build their businesses. Patni is currently managing back office accounting for 450 portfolio funds on behalf of customers within the hedge fund & mutual fund industries with more than $325 billion of assets under management.
• EXLS reported first quarter 2009 results – Revenue of $41 million, a decrease of 8% y/y and 6% q/q; net income of $3 million compared with $7 million made in first quarter of 2008; diluted EPS down to $0.10 per share from $0.12 in the previous quarter and $0.16 in the corresponding quarter previous year

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.

Markets and Industry Roundup - week ending April 24, 2009

Markets Roundup:

• Dow closed above 8,000 after starting the week off badly; NASDAQ ended positive
• Existing home sales for March fell 3.0% month-over-month to an annualized rate of 4.57 million as against an expectation of 4.65 million units
• New home sales for March came in at seasonally adjusted annual rate of 356,000, which was better than expected, but down 0.6% from an upwardly revised February data
• March durable goods orders and orders excluding transportation declined 0.8% and 0.6%, respectively; both not as bad as expected
• Government announced the details of its measures used for conducting a series of stress tests at 19 leading U.S. banks. Though actual results from the tests won't be available until May 4, the report acknowledged that most U.S. banking organizations currently have capital levels well in excess of the amounts required to be considered well capitalized. Meanwhile, Fed regulators generally assert that banks should be prepared for the worst.
• Treasury Secretary Geithner spoke before a congressional committee on Tuesday that there was still about $109.6 billion available from the $700 billion rescue package passed last year, and he expects to get at least an additional $25 billion back, bringing the total to $134.6 billion
• ECB President indicated that more rate cuts may be in order for the European economy, though such cuts would come in measures of 25 basis points

Industry Roundup:

• Tech services sector stocks were down 1% during the week
• IBM announced Q1 results – Revenue of $21.7 Bn down 11% from 1Q2008; Net income of $2.3 Bn, or $1.70 a share, compared to $2.32 Bn, or $1.64 a share in 1Q2008
• IBM and Equifax, a provider of information solutions, employment and income verification and human resources BPO services, announced that the companies have signed a contract amendment for IT services in the US, Canada, Spain and the UK. Under the agreement, IBM will provide data centre services including mainframe, midrange server, client service desk, network and business continuity and resiliency services for Equifax's operations
• IBM announced a new services contract to transform and operate Unilever's Human Resources (HR) processes across 19 Latin American countries
• HDFC Bank, one of the largest banks in India, announced an agreement with IBM to build a cost-effective IT framework that will support the bank's business growth. HDFC Bank is the first commercial bank in India to adopt the IBM mainframe & has joined the ranks of the world's top 50 banks that continue to run on System z technology.
• EDS, an HP company, announced a 5-year technology infrastructure outsourcing contract with Mazda Motor Europe. Under the agreement, EDS will consolidate technology from Mazda’s data centers in Willebroek, Belgium, and Leverkusen, Germany, to centralized services in EDS’ data center in Frankfurt, Germany.
• EDS, an HP company, announced a $245 million, 4.5-year agreement with the California Department of Corrections and Rehabilitation, under which EDS will provide system integration & applications modernization services to help increase availability of accurate and complete information so employees can easily monitor the effectiveness of department programs. EDS will create & manage the image capture, database, information storage & server environment where offender information will reside.
• CSC announced the launch of its Federated Identity Management (FIM) offering, a solution designed to enable companies and organizations to establish trusted relationships with business partners & outside parties as part of its Trusted Identity Enterprise Suite, a portfolio of fully integrated, end-to-end identity management solutions.
• CSC announced that it is expanding its industry-leading default management software-as-a-service, EarlyResolution, to include mortgage insurance eligibility requirements from Radian Guaranty of Philadelphia, Penn
• TCS announced its Q4FY09 and full year FY09 results – Revenue of $1.4 Bn for the quarter, down 5.5% Y/Y & 3.4% Q/Q; Full year revenue at $6.02 Bn, up 6.8% Y/Y; EPS for the quarter of $0.27 compared to $0.32 in same quarter last year; Full year EPS at $1.15 compared to $1.28 in the previous year; Board recommend 1:1 bonus
• HCL Tech announced its Q3FY09 results – Revenue of $564.4 million, a growth of 18.2% y/y & 11.3% q/q; EPS at $0.26 compared to $0.50 in JFM’08, a decline of 48% y/y
• Wipro announced its Q4FY09 results – Revenue of $1.05 Bn for the quarter, down 4.9% Q/Q and up 1.4% Y/Y; Net income for the quarter was $201 million
• WNS announced that it made a voluntary prepayment of $5 million on its existing $200 million term loan facility in early April 2009 as permitted under the loan agreement
• Hexaware has formed a global partnership with Greenplum, a provider of database software for the next-generation of data warehousing and large scale analytic processing. While Greenplum will provide the database platform, Hexaware will enable the migration, implementation, upgrades and maintenance services on these platforms