Satyam profit up 29 pct, sees no U.S. slowdown

BANGALORE (Reuters) - India's fourth-biggest outsourcing firm, Satyam, reported a 29 percent rise in quarterly profit due to new clients, and raised its full-year outlook as it saw no signs of a slowdown in business in its key U.S. market.

Satyam Computer Services does not predict demand for outsourcing will fall despite growing fear of a recession in the United States, which accounted for 60 percent of sales in the December quarter, Chief Financial Officer V. Srinivas said.

"While we are very keenly watching how things are unfolding in the U.S., at this point in time we don't have any indication from our customers that they are going to either cut down budgets or withdraw some of the projects," Srinivas told Reuters.

"If the degree of recession is very high and the U.S. economy crash lands, then I am sure that every one of us will be hurt. But if the U.S. economy soft lands, then we will escape unhurt... at this point in time we are quite bullish about the future."

Shares in Satyam, India's No. 4 software services exporter, closed 0.3 percent lower after slumping as much as 11.4 percent, its lowest level in 30 months, amid a broad sell-off.

"The numbers are in line with expectations, but the overall guidance is muted," said Harshad Deshpande, a sector analyst with Religare Securities. "Concerns still remain about the U.S. recession...smaller players are likely to get hit more."

Satyam, which specialises in business software and offers back-office services, said revenue in the year to March would grow between 29 and 29.2 percent, up from the 26.3-26.7 percent forecast in October.

Earnings per share were forecast to grow 18.9 percent, up from the 16.5-17 percent growth Satyam had projected in October.

RUPEE WOES

New York-listed Satyam, which plans to list its American Depositary shares on NYSE Eurnoext this week, said consolidated net profit for its fiscal third quarter rose to 4.34 billion rupees ($110 million) from 3.37 billion a year ago.

Quarterly revenue rose 32 percent to 21.96 billion rupees, as it added 32 clients including an investment bank and an oil firm.

That compared with forecasts in a Reuters poll of 4.32 billion rupees in profit on revenue of 21.60 billion.

Srinivas said Satyam was chasing about 20 deals, each worth more than $50 million and most of them in the United States.

India's export-driven services firms have been winning large outsourcing deals from western customers looking to cut costs, but a 12 percent rise in the rupee against the dollar in 2007, soaring wages and talk of a recession in the U.S. are concerns.

The rupee shaved 80 basis points from Satyam's margins in the December quarter, yet the company managed to boost its margins by 164 basis points from the previous quarter by increasing efficiency and billing rates, Srinivas said.

It was able to charge billing rates that were 3-5 percent higher on new contracts as well as on renewals of some existing contracts, chief executive officer B. Rama Raju told reporters.

Satyam, whose clients include General Electric and Qantas Airways, reported its results after bigger rivals Tata Consultancy Services and Infosys Technologies beat estimates, while Wipro lagged forecasts.

Satyam, valued at more than $13 billion, said on Monday it would buy Chicago-based management consulting firm Bridge Strategy Group for $35 million.