1. Cognizant lowers annual guidance (5/7/12) reviving Macro concerns. Takeaway: discretionary spending in Financial Services (capital markets) and pharma slow to start 2012. CTSH didn’t see the acceleration it expected in April. Hard to tell if there is another revision coming, but CTSH’s business model hasn’t changed. They have earned the benefit of the doubt.
2. IBM holds its analyst day in NY (5/9/12). Takeaways: business is on track for 2015 plan, customer touch points are expanding to include CMOs, & technology driven productivity & improvements are driving demand. We like the Buffet “Buy”.
3. Virtusa reported solid results proving the doubters wrong and driving the stock up 17% (5/9/12). There is no way to avoid a macro economic issue, but VRTU may be better positioned as it is scaling up (working on larger engagements).
4. Forrester & Infosys debate visa concerns (5/9/12). Stephanie Moore, Forrester analyst, stated that Infosys’ visa issues are a concern for her clients, while INFY claims it hasn’t heard any concern. Expect more about visa’s as we get closer to the Jay Palmer trial.
5. Igate (N/R) holds its first analyst day (5/10/12). Takeaways: Banking & Financial Service didn’t fully utilize their budgets in 1Q, demand has picked up, but still feeling squeamish about 2012. IGTE will invest anything above the present margin profile, pipeline is good (2.5x revs), & IGTE has purged its client list. It will be interesting to see how the new entity & iTOPS plays out.
6. 5 Outsourcing Trends according to CI0.com (5/10/12): 1) smaller deal sizes with the # of deals increasing, 2) new pricing models, 3) multi-sourcing, 4) increased focus on security & cloudsourcing. All are clear signs that the business is maturing.
7. Business Standards reported that Ashok Vemuri of Infosys has resigned (5/11/12). Ashok is the head of manufacturing recently moved from BFSI and a board member. Infosys didn’t comment on the speculation.
8. Just wondering: how much of the recent disappointing results are attributed due to maturity vs. demand.
9. Busy week next week as we are meeting with: WNS, CTSH, G, VIT, & WIT. Please see your Janney Salesperson for details.
10. Congratulations Boston Celtics. Proof that even the older athletes can turn it up once in awhile.
Joseph D. Foresi
617-557-2972