This summary is based on the third quarter fiscal 2008 earnings call conducted by Wipro Ltd. (WIT) on 21 January, 2009.
Management:
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Chairman: Azim Premji
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Chief Financial Officer: Suresh Senapaty
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IR: Sridhar Ramasubbu
Key Investors Issues
- Total revenue was Rs. 65.39 billion ($1.35 billion), an increase of 25%.
- Net income was Rs.8.98 billion ($185 million) or Rs. 6.17 ($0.131), up 9% over last year.
Third Quarter Highlights
Total revenue was Rs. 65.39 billion ($1.35 billion), representing an increase of 25% due to strong revenue growth from IT Serrvices.
- Net income was Rs.8.98 billion ($185 million) or Rs. 6.17 ($0.131), representing an increase of 9% over last year.
- Revenues of the IT Services segment that $1100 million or in rupee terms 50.6 billion, a growth of 3.5% in constant currency and a decline of 0.9% sequentially on a reported basis.
- The firm had strong growth in retail and transportation verticals, with constant currency sequential growth of 11.4% and year-on-year growth of 38%.
Communications and media service providers grew 5.5% sequentially on constant currency terms and the Financial Services vertical showed strong constant currency growth of 28%.
- Technology Infrastructure services and Testing services have shown strong growth of 20% and 24% on a year-on-year basis.
- From a geographic perspective, there was strong growth in Europe on a constant currency basis of 7.5% sequential and 24% year-on-year.
- India and Middle East business had another strong quarter, with sequential growth rate on constant currency terms of 5.5% and year-on-year growth rate of 52% on constant currency.
- The firm won four multi-year multi-million dollar deals in the quarter of December and added 31 new customers.
It completed the acquisition of Citi Technology Services.
- As part of the deal, Wipro gets committed business from Citigroup of at least $500 million over a six years period apart from the exclusivity for all IT Infrastructure services for Citigroup out of India.
- It also gets preferred vendor status for application development and maintenance work delivered out of India.
- Price realization improved 120 basis points sequentially in constant currency through higher productivity; however the firm is seeing significant price pressure as customers are pushing hard to save cost.
Key questions and answers from the third quarter earnings call conducted by Wipro Ltd. (WIT) on 21 January, 2009.
Ed Caso (Wachovia):
Can you give us an update on your BPO business, pricing turnover tone of business?
Suresh Senapaty: We have really got the BPO business and the IT business working much closer together and, therefore, creating quite a few BPO-IT-type of opportunities, or integrated BPO-IT type of opportunities.
Our focus has been to drive transaction processing business as against voice business and there has been substantial movement so far as that is concerned.
While the BPO business in terms of revenue may not look exciting in context of the growth that we have had across some of the other service lines, but in terms of order booking it has been fairly healthy.
We finalized quite a few, specifically for fairly substantial BPO deals, which are transaction processing deals this quarter and the order booking has been significantly ahead of what we achieved last year, despite this year being much more economically challenged.
Ed Caso (Wachovia):
Your number of active clients has trended down similar to the other two firms that have reported already. Is there a movement to sort of send your customer base to just the better customers?
Suresh Senapaty:We have added as many as 31 new customers this quarter. There has also been customer attrition, but that is not attrition in context, that means more attrition in context of our finishing projects with customers or completing our projects with customers and really that is it.
Most of the customer attrition has been in the context of projects that we were executing having being completed.
