Infosys First-Quarter Profit Falls, Missing Analyst Estimates

July 13 (Bloomberg) -- Infosys Technologies Ltd., India’s second-largest software exporter, reported lower first-quarter profit after it cut prices to retain contracts.

Net income fell 2.6 percent to 14.9 billion rupees ($318.5 million) in the three months ended June 30, from 15.3 billion rupees a year earlier, Bangalore-based Infosys said today. That compared with the 15.6 billion rupee average of 25 analyst estimates compiled by Bloomberg.

Chief Executive Officer S. Gopalakrishnan cut prices to retain and win business from customers in the U.S. and Europe including Alstom SA, the maker of Amtrak’s Acela high-speed trains, and Microsoft Corp. The euro’s 6.3 percent decline against the rupee in three months to June 30 dragged down the value of sales in Europe, which accounts for about 20 percent of Infosys’s business.

“Naturally, there’s going to be some negative impact on all exporters from unfavorable currents in currency,” Jayesh Shroff, who manages about $1.4 billion in equities at SBI Funds Management in Mumbai, said before the announcement. “It has nothing to do with the fundamentals of the software export business. We’re seeing strong global demand for IT services, so we have a generally positive outlook on the industry.”

The weakness of the euro, which has lost about 12 percent against the rupee this year, and ripples from the Greek debt crisis will result in a 12 to 15 percent loss in income for the Europe-based business of Indian IT vendors, according to estimates from Forrester Research, Inc. in Cambridge, Massachusetts.