Infosys Fades on U.S. Economy Concerns

During the conference call, Infosys' management stressed that they have not seen any clients delay or cancel specialized consulting projects or general IT services contracts that "keep the lights on." The comment was clearly intended to soothe investor worries that an economic slowdown or problems in credit markets, namely in the U.S., would diminish growth prospects.

Underscoring that point, Infosys raised its full-year revenue growth target for the second time. The company expects revenue to rise to 34.5% to 35% from its previous range of 29% to 30%. This implies full-year revenue of at least $4.43 billion, well above analysts' forecasts.

Infosys projected annual earnings of $1.98 to $1.99 a share, up from its earlier estimate of $1.92 to $1.94.

But this guidance was clearly more conservative than investors had hoped. Management reinforced this conservative perspective by saying that they would have to wait until January to see how clients' budgets would affect future IT spending.

"I think they try to give the message that there is no slowdown, but they are being cautious, conservative in their outlook," says Moshe Katri, an analyst with Cowen. "But judging by the rally in the stock ahead of the release, I think that the investor base was looking for more upbeat tone to the call."