Patni Computer sees pricing, volume pressure in Q1

MUMBAI (Reuters) - Patni Computer Systems expects the first quarter to be hurt by pricing and volume pressures, a top official said on Thursday.

The company expects first-quarter net income between $13.5 million to $14.5 million, excluding a foreign exchange impact, and revenues between $154 million to $155 million.

It expects a mark to market loss of $7 million for the Jan-March period.

"The guidance is based on current visibility. We find volumes softening and customers are looking at pricing relief," Surjeet Singh, chief financial officer, told Reuters.

"There are some marginal price adjustments we have done, that has been factored in the first quarter forecast," he added.

The revenue outlook represents a 12 percent decline from the firm's fourth quarter revenues of $176.4 million, largely reflecting a drop in volumes, he said.

Volumes fell because of longer sales cycles as clients put off decisions, opting to wait for an improving economic climate,

he said.

"It looks like the problems are deeper....and everybody is trying to look at visibility that they have...and spend money in line with what they have."

India's IT industry has been hit by the recession in its main export market, the U.S., and the turmoil in the global financial sector.

The National Association of Software and Service Companies had said India's software and services exports should rise 16-17 percent to about $47 billion in the year to March 2009, slower than the 21-24 percent forecast earlier. [ID:nDEL002511].

Patni's net income for the Oct-Dec period fell 36 percent to $16.1 million from the same period last year, hurt mainly by a foreign exchange loss of $12.6 million.

"We will see a little bit of softness in the business for a few quarters to come," Singh said.

The company said is implementing performance-based workforce reductions, he added.

"Performance based reductions are happening...we can't have non performers continue," he said without quantifying the staff cuts.

Patni Computer is also working to increase production and cut overall costs to customers.

It is looking to cut discretionary costs, including spending on travel, communication and admin.

Patni's customers include General Electric Co, Hitachi Ltd, UK's Carpone Warehouse.