This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Infosys Must Overcome Margin Pressure

Stocks in this article: ORCL CSCO INFY IBM ACN CTSH

NEW YORK ( TheStreet) -- Given the weaker-than-expected results we've seen in hardware and software companies such as  Oracle (ORCL) and Cisco  (CSCO), there's no question that robust IT enterprise spending still remains "right around the corner." And this constant waiting game makes it increasingly difficult to value companies like Infosys (INFY) that rely on an even weaker spending environment in IT consulting.

Fearing that this industry is still ways away from returning to its once-robust levels, the Street has already punished larger rivals like IBM  (IBM) and to a lesser extent Accenture  (ACN). While I've always believed in this industry, my concern is that Infosys, despite being better managed, would find it increasingly challenging to maintain the portion of the market that it currently has.

[Read: Cold? Blame Global Warming]

On Friday,Infosys will report its first quarter results. Although the Street seems a bit more optimistic, with projections of 9.2% revenue growth, it's hard for me to get excited about the company's earnings projections, expected to be a penny lower than last year. And I have to believe that the company's margins might be a big reason for the expected decline.

We can always blame macro weakness for any downbeat results in the overall consulting space. But Infosys management has made some questionable decisions that has caused me to rethink the company's prospects. Perhaps the company's market position might not be as strong as the Street believes it to be.

For instance, unlike Accenture and Cognizant (CTSH), Infosys management have been more "reactive" than proactive. I don't believe the company has responded quickly or adequately enough to the changing market. Plus, I believe their failure to unhinge the company from the discretionary spending environment, which is always in flux, has set the company back against both Accenture and Cognizant.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs