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Vice-chair sells all shares, CEO half as Cognizant soars

Vice-chair sells all shares, CEO half as Cognizant soars
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First Published: Fri, Nov 20 2009. 01 15 AM IST

 Great timing: Lakshmi Narayanan, vice-chairman of Cognizant. Hemant Mishra / Mint
Great timing: Lakshmi Narayanan, vice-chairman of Cognizant. Hemant Mishra / Mint
Updated: Fri, Nov 20 2009. 05 48 PM IST
Mumbai: Senior executives of the New Jersey, US, headquartered firm Cognizant Technology Solutions Corp. have sold shares worth $13 million (Rs60.3 crore) in two weeks starting 6 November, after the stock hit an all-time high on the Nasdaq stock exchange. In one case, an executive sold all his shares; in another, more than half.
Great timing: Lakshmi Narayanan, vice-chairman of Cognizant. Hemant Mishra / Mint
The executives who sold shares in the last two weeks include its president and chief executive Francisco D’Souza, chief operating and financial officer Gordon Coburn, chairman of the company’s board John E. Klein and vice-chairman Lakshmi Narayanan.
CEO D’Souza, who sold the maximum number of shares on a single day, earned around $8 million by selling 175,440 shares on 16 November.
Interestingly, this sale has more than halved the number of shares he owns in the company; he now owns 168,681 shares in the company.
Vice-chairman Narayanan made $3.5 million by selling 76,500 shares, in separate transactions on 16 November and 17 November. He no longer holds any shares in the company.
Cognizant board chairman Klein, who sold 40,000 shares on 6 November to earn $1.7 million, now holds 428,700 shares in the company.
A Cognizant spokesperson said that the company does not comment on sale of shares individually owned by members of the management.
Institutional investors hold as much as 91% of the outstanding shares of the company which had a market capital of $13.43 billion as on 18 November.
Shares of the company, which currently employs at least 67,000 staff, have seen a rally since June and have touched all-time high levels of $45 in November. Since the end of the June quarter, Cognizant’s shares have gained 71%, from $26.7 on 1 July to $45.6 on 18 November.
Also See All-Time High Price (Graphics)
“With the stock trading at all-time high levels, (it is a good time) for the members of the management to book gains at this time, especially as they would have gotten it through Esops (employee stock options),” said an analyst with a Mumbai-based investment advisory firm. He requested not to be identified as he is not authorized to speak to the media.
Cognizant, which clocked $2.8 billion in revenue in 2008, competes with leading Indian information technology (IT) firms such as Tata Consultancy Services Ltd, Infosys Technologies Ltd and Wipro Ltd.
In terms of sequential growth, or adding incremental revenue over the previous quarter, Cognizant has outperformed Indian IT firms for the last two quarters. The company, based in the US, does almost all its development work out of India.
In the quarter to June, in dollar terms, Cognizant’s revenue grew by 4.1% over the quarter to March; and in the September quarter, the company’s revenue grew by 9.9% to touch $853 million.
Cognizant makes nearly 78% of its revenue from the US and around 19% from Europe. Revenue from financial services clients makes up around 43% of Cognizant’s revenue, while clients in the healthcare sector contribute 26%.
After the September quarter, in absolute numbers, Cognizant’s revenue from financial services clients trails that of Infosys by only around $23 million. While Infosys earned $387 million from this segment, Cognizant was close behind at $364 million.
With its acquisition of the India back-office of Swiss financial services firm UBS AG in October for $75 million, Cognizant’s revenue from the banking, finance and insurance sectors is expected to outstrip that of Infosys by the December quarter. Along with the acquisition, Cognizant got a five-year IT services contract worth $440 million.
Cognizant, started in 1994, was originally an in-house unit of Dun and Bradstreet Corp. (D&B) in India. The firm split from D&B in 1996, completed its initial public offering and was listed on Nasdaq in 1998.
Graphics by Ahmed Raza Khan / Mint
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First Published: Fri, Nov 20 2009. 01 15 AM IST