Wipro profits up; outlook gloomy

In difficult economic times Wipro Limited (NYSE:WIT) is still making gains. In the company’s results for its fiscal year ending March 31, 2009 Wipro saw total revenue of Rs. 254.56 billion, representing an increase of 29 percent over the same period last year. Its net income was Rs. 34.42 billion, representing an increase of seven percent over the same period last year. But the Indian software major also forecast a drop in revenue for the current quarter amid a weakened outlook for outsourcing orders.

“2008-09 has been a landmark year for us. We did a major re-organization of our IT business at the beginning of the financial year. It has been a year of solid execution in a subdued environment resulting in industry leading growth. Revenues for the IT Services for the full year were $4.3 billion, a YoY growth of 18.5 percent on reported basis and 22.3 percent on constant currency,” said Wipro Chairman Azim Premji.

Wipro’s IT Services added 110 new clients during the year. In addition to new customers in the airline, education, financial services, pharmaceutical and insurance industries, Islamic investors should note that Wipro won a multi-million dollar engagement with an international tobacco giant. As an infrastructure managed services partner, Wipro will support the tobacco company’s single instance business critical global systems and the infrastructure on which they run.

In India and the Middle East, Wipro made gains. The quarter saw the largest win in the area of e-governance from ESIC – Employee State Insurance Corporation, a deal valued at Rs.1,182 crores. The company also won a large infrastructure roll out for BSNL, and a complete Oracle e-biz roll out including CRM implementation at a telecom service provider in Bangladesh. In the Middle East the company had a large win at commercial bank in Bahrain for end-to-end risk management solutions.

According to The Hindu Business Line, Wipro is planning to recruit 8,000 employees for Wipro Business Process Ourtsourcing (BPO) this financial year. Of this, 1,200 staffers would be added to its Hyderabad facility. However guidance from Research Oracle suggests that the significant increase in Wipro’s common stock price, coupled with uncertain revenues, mandate a sell.

“We remain concerned regarding the declining demand for IT services from US and European clients, who collectively account for more than 80 percent of Wipro’s revenues,” noted Research Oracle. “We expect organizations to continue to trim IT budgets as part of wider cost-cutting measures in the current environment. Based on these challenging operating conditions, Management’s mute guidance and the current stock price levels, we maintain our cautious outlook on the Wipro common stock and are downgrading it from a hold to a sell.”

‘Small Things’ for a difference

Through December 2009 Intel, Kiva.org and Save the Children are working together on an effort called the Small Things Challenge. The purpose of the challenge is to raise awareness and funds so children in developing countries can attend primary school and their parents can earn higher incomes. Throughout the developing world more than 75 million primary age children are not in school — robbing them of future opportunity continuing the cycle of poverty — and at least 80 percent of humanity lives on less than $10 a day, according to data from the United Nations.

Intel will donate 25 US cents to be divided between Kiva.org and Save the Children for every person who clicks on the “we’ll donate 25 cents for you” button at www.smallthingschallenge.com. The idea of the 25 cent donation is so that people can see how small amounts of money when donated by many individuals can add up to a large total. Intel is committed to donating up to $300,000 – depending on the number of unique clicks it receives at www.smallthingschallenge.com.

“The spirit of entrepreneurship is as strong among the poor of the developing world as it is in Silicon Valley,” said Kiva.org CEO Matt Flannery. “Micro-loans have helped people increase their incomes through self-employment. The Small Things Challenge aims to continue empowering the world’s poor so they can better support their families and keep their children in school, ultimately breaking the cycle of poverty.”

Fujitsu HDD goes to Toshiba

Toshiba Corporation and Fujitsu Limited have agreed to the transfer of Fujitsu’s hard disk drive (HDD) business to Toshiba. The agreement follows a memorandum of understanding (MoU) signed by the companies on Feb. 17, 2009. The companies will now seek to complete the business transfer by the target date of July 1, 2009. The deal creates the world’s largest manufacturer of mobile drives.

Fujitsu’s HDD related business and functions will be transferred to a new company, Toshiba Storage Device Corporation (TSDC). Fujitsu’s HDD manufacturing subsidiaries, Fujitsu Computer Products Corporation of the Philippines (FCPP) and Fujitsu (Thailand) Co., Ltd. (FTC), will become Toshiba Storage Device (Philippines), Inc. (TSDP) and Toshiba Storage Device (Thailand) Co, Ltd.(TSDT). The HDD related business of Yamagata Fujitsu Limited will become Toshiba Storage Device Yamagata Corporation (TSDY). Upon completion of the transfer, these three companies will become wholly owned subsidiaries of TSDC.

Toshiba will acquire a stake of 80.1 percent in TSDC by the target date of July 1, 2009 and make it a Toshiba Group subsidiary. Fujitsu will continue to hold a stake of 19.9 percent until the end of December 2010. After that, Fujitsu will transfer its stake to Toshiba, at which point TSDC will become a wholly owned subsidiary of Toshiba.

The transfer of the HDD business will see approximately 800 employees in Japan and approximately 7,000 employees worldwide transfer to Toshiba Group from Fujitsu Group. Redundancies are expected.

Boom times ahead

Africa and the Middle East (AME) will lead the world in terms of the percentage of mobile broadband subscriptions through 2012, according to the latest report from Pyramid Research (www.pyr.com). Titled “Emerging Opportunity: Boom Times Ahead for Mobile Broadband in Africa & Middle East” the report examines the use of mobile broadband as an Internet access technology for PCs.

Although Africa and the Middle East (AME) generated 10 percent of global mobile revenue in 2008, the region contributed only three percent of global mobile data revenue, noted Dearbhla McHenry, analyst at Pyramid Research and the author of the report. However, the region will double its share of global mobile data revenue by 2014 due to the growing popularity of mobile broadband in the region, in rich and poor markets alike.

“We expect mobile broadband adoption in Africa and the Middle East (AME) to grow faster than the global average over the next five years, with the subscriber total increasing at a CAGR of 33 percent to reach 32.2 million by 2014,” McHenry said. “Just as markets in Africa and the Middle East (AME) were starved for voice communications prior to the mobile era, so too were they starved for Internet access: Inadequate fixed infrastructure and insufficient competition in the fixed market meant that services were either unavailable, unaffordable, or both. The launch of 3G services in much of the region means that its Internet market is now on the brink of a similar makeover as when the advent of mobile communications famously and dramatically transformed AME’s voice telecommunications sector.

Thanks to mobile broadband, Pyramid predicts that AME can expect Internet penetration to rise to six percent in 2014. Although an impressive 94 percent of these connections will be broadband, the average bandwidth of broadband connections will be much lower than in regions where wire-line technologies dominate. In terms of subscribers, AME’s largest mobile broadband markets will be South Africa, Turkey, Saudi Arabia and Nigeria. By 2014, together these countries will have 41 percent of the region’s mobile broadband subscribers generating 36 percent of its mobile broadband revenue.