Today in Tech: Revenue-Profit-Price movements; Lateral Hires; Rupee Depreciation

NS Ramnath
Updated: Oct 1, 2012 01:32:04 AM UTC

I have been with Forbes India since August 2008. I like writing about ideas, events and people at the intersection of business, society and technology. Prior, I was with Economic Times. I am based in Bangalore. Email: ns.ramnath@gmail.com

Revenue, net profit and share price movements - what do they say? Over the last couple of weeks, I was looking for charts that would give me some idea about how revenues, net profits and share prices are moving in relation to each other. I found a few - plotting revenue and net profit, revenue and share price, and net profit and share price. They gave some idea, but also had a couple of limitations. First, since the scale was different, I was not sure if I read the charts right. Second, as a result of this, all charts that I came across had only two variables (Revenue / Share price or Net profit / share price). So, I tried bringing all these numbers to one base - 100 end of June 2007, and tried to plot how these numbers have moved for TCS, Infosys and Cognizant. Here they are.

TCS
TCS
TCS

I found these interesting: Share price seems to be in line with revenue and net profit only for TCS. Sometime in September 2010, Cognizant seems to have stepped on the gas to get more revenues, while Infosys seems to be still struggling with growth/profit dilemma. The stock market is impressed with neither.

Are we making too much out of Rupee depreciation?
The general feeling is that depreciating Rupee is good for IT companies. But, Spark Capital, in a note released yesterday, argues that there might be undue cheer. For two reasons: one, the cash it generates - which is a function of offshore component, hedging etc and therefore varies from company to company - does not change the fundamentals of a company; and two, the bigger concern is the demand for IT services and that is the key determinant of valuation today.

Lateral hires in IT companies
Last week, I asked readers  to use the data from Linkedin to make an infographic on the lateral hires. Tushar Jain sent in a graph. Here it is.

TCS

Tushar has explained the idea behind it on his blog. Please have a look.

Also of interest

  • Som Mittal's term as Nasscom's president extended: ET NOW
  • iPad consumes less than 12 kWh of elelctricity over the course of a year: EPRI press statement 
  • 11 PM rule in Karnataka hurting IT/BPO firms: Business Line
  • Times of India has a list of expats who moved out: Here
  • Companies must cultivate leaders for global markets. Dispelling five common myths about globalization is a good place to start: Pankaj Ghemawat in McKinsey Quarterly
  • Why Google's new tablet could be the iPad's first real competition: Forbes Tech
  • Facebook Changed Everyone’s Email to @Facebook.com; Here’s How to Fix Yours: Life Hacker

 

The thoughts and opinions shared here are of the author.

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