NIIT crashes 16% on profit warning

NIIT crashes 16% on profit warning
ENS ECONOMIC BUREAU

MUMBAI, MAR 8: Computer major NIIT's stock crashed by 16 per cent to Rs 1003.40 on heavy pounding triggered by profit warnings induced by slowdown in the US economy.

The NIIT scrip was under pressure following a statement by the company that its US software revenue growth will decline. The company said that for the second quarter ending March 2001, US software revenue growth will be below its estimates. However, it has not given the actual figures.

Marketmen said that the NIIT warning may have its impact on other software stocks. Earlier, leading Indian software companies like Infosys and Wipro had shrugged off the market fears of a US slowdown affecting their performance. However, most of the negative factors, including the US slowdown, have already been discounted in the latest prices of software stocks and that would limit a further decline.

Arvind Thakur, president of NIIT's global software business, said that two of its software clients in the US are merging leading to consolidation of projects and delays in starting them. He also said that the company is expecting longer selling cycles for high-value software business in the US.

Thakur has further said that with a view to contain the damage, the company was putting into action a set of strategies aimed at intensifying business acquisition with large clients, cutting overheads and resorting to just-in-time hiring.

Vijay Thadani, chief executive officer, NIIT, said the growth in operating profit margins will be lower in the current quarter.

CHENNAI BUREAU ADDS: The placement sector of the Indian IT industry is likely to be the most affected by the apparent slowdown in the US economy, according to DSQ Software Limited.

``Placement business by Indian IT outfits appears to bemore promising in Europe and South East Asia than in US in the current context," Pawan Kumar, president and CEO of the company told newsmen on the occasion of the inauguration of its new Offshore Development Centre (ODC) at TIDEL park here today.

Stating that the US market for Indian software except placements is still going strong, he said that this was evident from the spurt in the number of proposals for software business in US and visits by US corporate teams to Indian IT firms in the first two months of this year which he said was much more than what it was during the six months ending on December last.

ICE STOCKS FALL: After a brief turnaround, technology, media and telecom stocks once again came under pressure in volatile trading on the Bombay Stock Exchange (BSE) today in the wake of heavy selling from speculators and domestic operators. The benchmark Sensex came off from the high level but closed with a gain of only 10 points.

As a result, tech shares which had staged impressive recovery yesterday, again turned weak following selling by speculators which attempted to book losses at every given opportunity as rumours of payment crisis on the Calcutta stock exchange that had last day of current account, continued to take rounds in the market.

Sensex opened sharply up at 4089.83 and to the day's high of 4108.03 at the initial stages. It later fluctuated erratically and dipped to the intra-day low of 4016.71 before closing at 4056.94 as against yesterday's close of 4046.89, netting a modest rise of 10.05 points. The BSE-100 index eased by 1.70 points to 1998.64 from the previous close of 2000.34.

Himachal Futuristic, however dropped by 71.95 to 389.20, Infosys Tech by 78.20 to 5113.65, Satyam Computer by 13.25 to 257.75, Zee Telefilms by 3.25 to 129.35, BHEL by 2 to 159.20, Glaxo by 10.10 to 489.30, Ranbaxy by 13.10 to 675.75, SBI by 1.20 to 262.10, Aptech by 15.85 to 150.60, Sterlite Optical by 35.70 to 414.60, SSI Ltd by 72.90 to 915.10, Pentamedia Graphic by 9.95 to 136.85, HCL Infosys by 9.20 to 150.05, Global Tele by 12.85 to 267.30, Knoll Pharma by 13.30 to 318.75, German Reme by 21.85 to 559.50 and Sun Pharma by 19.50 to 521.40.