NEW YORK ( TheStreet) -- It's still anyone's guess when IT consulting services, which was once a dominant industry, will get back to its lofty levels.
Results from industry leaders IBM (IBM) and Accenture (ACN) have been less than favorable. This does not bode well for Infosys (INFY - Get Report), which is expected the report fiscal first-quarter earnings on Friday.
Indicators suggests the underlying market conditions are not stabilizing as quickly as expected. This spells doom for Infosys for several reasons. While I've always liked the company's potential, Infosys' management has made some questionable decisions causing me to rethink the company's prospects.
I don't disagree that the macro weakness in consulting services has had an impact on the company's decisions. But unlike Accenture and Cognizant (CTSH), the moves that Infosys has made recently have been too reactionary. Nor do I believe that management has responded quickly or adequately enough to the changing market. This showed in the company's fourth-quarter earnings release in April.Although the company posted decent revenue growth up 18% year over year, Infosys had nothing to show for it in terms of profitability. Gross margin was down nearly 6% year over year and 2% sequentially. Due to an unfavorable mix and almost a 1% drop in prices, operating income plummeted 7% year over year, missing Street estimates by roughly 9%.
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