Wednesday, 28 October 2009

Axon still dragging HCL’s revenues

(By Anthony Miller – Wednesday 28th October 2009 9:45am). It looks like Axon is yet to restore the fortunes of HCL’s enterprise application services (EAS) business as management had so richly hoped. EAS revenues fell nearly 5% qoq (constant currency) in HCL’s Q1 10 (to 30th Sep), steeper than the 1% decline the prior quarter. The Axon acquisition more than doubled the size of HCL’s EAS practice, and the combined operation now contributes 22% of HCL’s total revenues. However, even this appeared to be a better result than at TCS and Infosys, which both showed steeper qoq declines in EAS revenues (as reported). Wipro’s EAS business grew slightly qoq (as reported).

Across the board, HCL’s revenues rose 2.3% qoq (in line with peers) to $630m, and margins remained flat at 18.0% qoq, but down 60bps yoy (peers did better). HCL’s European revenues grew 1.5% qoq and the region now generates 29% of the total. Chairman Shiv Nadar referred to “signs of an early recovery in sectors like Financial Services” but didn’t expect to see sustained recovery till next year.

We’ve got a lot of digging to do around these numbers and will write more in the next issue of OffshoreViews.

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