Saturday, January 15, 2011

iGate Corp. (NASDAQ: IGTE): Q4 Earnings Preview 2010

iGate Corporation (NASDAQ: IGTE) is scheduled to release its fourth-quarter earnings before the opening bell on Wednesday, January 19, 2011. Analysts, on average, expect the company to report earnings of 26 cents per share on revenue of $80.31 million. In the year ago quarter, the company reported earnings of 15 cents per share on revenue of $52.40 million.

iGATE Corporation provides outsourcing solutions that offer a business outcome based pricing model through an integrated Technology and Operations (iTOPS) structure with global service delivery. The company counts General Electric and Royal Bank of Canada among its top customers.

In the preceding third quarter, the Fremont, California-based company's net income was$14.27 million, or 25 cents per share, from $8.88 million, or 16 cents per share, in the comparable quarter last year. Revenue rose to $74.85 million from $49.06 million. Analysts, on average, expected the company to report earnings of 21 cents per share on revenue of $68.81 million.

At its last earnings call in October, the company said that it expects 7-8 per cent sequential revenue growth in the fourth quarter. This implies fourth-quarter revenue of about $80.1-$80.8 million.

The company, whose rivals include Cognizant Technology and Indian IT firms like Infosys Technologies and Tata Consultancy Services has seen a slight rise in pricing this year. The company expects non-financial customers to drive growth in the next 2-3 years, with clients from the optical networking space to be among its top ten customers in 2011.

iGate is set to acquire India’s sixth largest software exporter, Patni Computer Systems in a $1-billion deal, after it reached an understanding with its promoters. Patni, a mid-sized IT services firm, provides software solutions in verticals such as insurance, telecom, utilities and retail. Even as the larger question of whether iGate, headed by Phaneesh Murthy, once a rising star at Infosys Technologies Ltd, has the appetite to digest an acquisition nearly thrice its size remains, experts agree that scale will probably be one of the biggest gains from the transaction. The combined entity, thanks to its newfound size, will become eligible to compete with the bigger boys like Tata Consultancy Services Ltd or Infosys for larger deals.

In terms of stock performance, iGate shares have gained nearly 94 percent over the past year.

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