This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration. Need a new registration confirmation email? Click here
April 5, 2011 /PRNewswire-Asia-FirstCall/ -- HiSoft Technology International Limited ("HiSoft" or the "Company") (NASDAQ: HSFT), a leading
China-based provider of outsourced information technology and research and development services headquartered in
Dalian, China, today announced the estimated impact on its business and results of operations from the
Japan earthquake and tsunami that struck the northeastern coast of
March 11, 2011. The Company also announced it will hold a conference call with analysts and investors on
Tuesday, April 5, 2011, at
6:00 p.m. Eastern Time to discuss this update in more detail.
In response to unfolding safety concerns at the damaged nuclear facility in Fukushima,
Japan following the earthquake and tsunami, the Company incurred relocation expenses associated with relocating its nearly 200 Japan-based employees and their families starting on
March 14, 2011. Those employees and their families were given the option of being relocated to
Osaka, Japan or to
China to work out of these alternative locations, after consultation with the Company's clients.
"Employee safety is our main priority as we confront these unexpected tragic events in
Japan and this is why we made the decision to relocate our employees and their families," stated HiSoft Chief Executive Officer
Tiak Koon Loh. "Over the last few weeks, we have been relieved to see daily life and businesses in
Tokyo gradually return to normal. Most of our employees have safely returned to
Tokyo and resumed work with our clients."
As a result, in the first quarter of 2011, HiSoft experienced additional operating expenses of approximately
$0.7 million, or approximately
US$0.02 per non-GAAP diluted earnings per American depositary share ("ADS"), and loss of revenue from work interruptions of approximately
$0.6 million, or approximately
US$0.02 per non-GAAP diluted earnings per ADS. The additional operating expenses and revenue reduction totaled approximately
$0.04 per non-GAAP diluted earnings per ADS in the first quarter of 2011 based on 32.3 million weighted average ADSs outstanding.
The United States and
Europe form our largest market and while we continue to experience strong demand in this region,
Japan is our oldest market representing approximately 23% of our net revenues in 2010," said Mr. Loh. "Through our meetings with significant clients over the last two weeks we expect to see a slowdown in contract signing in the short-term as there are challenges and uncertainties for some clients, especially those in the manufacturing and insurance sectors, to proceed with planned IT projects because of new and changing operational priorities. Our goal during this time is to maintain close relationships with those clients while positioning ourselves for new opportunities in the future. As such we will maintain key resources for our significant clients even with a slowdown in their IT spending over the short-term."
In view of the above as a direct result of the
Japan earthquake and tsunami, the Company believes it is most prudent to provide an updated financial outlook for the remainder of 2011 based on its current views and assessment of the events that have continued to transpire and unfold in
Japan. The Company expects full year 2011 net revenues to be reduced by less than 2% from its previously announced forecast of
US$198 million due to the natural disasters in
Japan. Accordingly, the Company has updated its full year 2011 net revenues forecast to be at least
US$194.5 million, with non-GAAP diluted earnings per ADS expected to be in the estimated range of
US$0.76 to US$0.80, based on 32.8 million weighted average ADSs outstanding. The Company noted that this updated forecast of estimated net revenues and non-GAAP diluted earnings per ADS may be adversely and materially affected should the situation in
Japan, as a result of the
March 11, 2011 earthquake and tsunami and the subsequent nuclear threat from Fukushima, continue to worsen in the future.
Mr. Loh concluded, "While the current situation in
Japan may present near-term challenges and uncertainties, we believe the market will show increased demand for our IT services over the long-term as
Japan rebuilds itself. In recent dialogs with our clients in
Japan, a number of them have expressed increased interest in offshoring as part of their business continuity planning. We also believe that the increased infrastructure spending in 2011 to rebuild
Japan will increase business activities across many industry segments. Again, I want to emphasize that we remain fully committed to the Japanese market and are optimistic about its rebound."
Conference Call Details
HiSoft management will hold a conference call on
Tuesday, April 5, 2011 at
6:00 p.m. Eastern Time (
Wednesday, April 6, 2011 at
6:00 a.m.Beijing/Hong Kong Time). Analysts and investors interested in hearing more information regarding HiSoft's
Japan developments are encouraged to join the Company for its conference call at the following:
U.S. Toll Free: 1-800-860-2442