India's Infosys posted worse-than-expected first-quarter profit and cut its outlook for the full year, raising new concerns about a slow-down business spending and sending the technology company's shares to levels not seen in three years.
Recent news coming out of the tech industry has been mostly bad and it was the worst performing sector on the Standard & Poor's 500 index Thursday.
For the quarter ended June 30, Infosys earned $416 million, or 73 cents per U.S. share, up 8.3 percent from $384 million, or 67 cents per U.S. share, in the same quarter last year.
Revenue rose 4.8 percent to $1.75 billion from $1.67 billion.
Analysts, on average, expected a profit of 75 cents per U.S. share on $1.75 billion in revenue, according to a FactSet poll.
Infosys said sustained and dismal global economic conditions resulted in lower IT spending by large companies.
For the fiscal year ending March 31, Infosys said it now expects to post a profit of at least $3.03 per U.S. share on at least $7.34 billion in revenue. The company previously projected a fiscal 2013 profit of $3.12 to $3.17 per share on $7.55 billion to $7.69 billion in revenue.
Analysts polled by FactSet expect a profit of $3.07 per share on $7.28 billion in revenue.
Jefferies analyst Vishal Agarwal stood by his "Buy" rating for the company, but he was disappointed that that volume increases were more than offset by a pricing decline.
The lower margins that have resulted, which will probably continue into the second quarter, he said.
Baird analyst David Koning advised investors against picking up shares.
"Despite relative valuation that is nearing historical lows, we prefer to stay on the sidelines, (even after this morning's expected selloff), as we believe continued market share losses will remain a risk," Koning wrote.
U.S. shares of Infosys Ltd. fell $5.08 to $39.04 in heavy morning trading, after dropping as low as $38.12 earlier in the session. The drop marked the company's lowest share price since July 2009.