New Delhi: Quarterly net profit of HCL Infosystems plunged 74% as its flagship computer retailing business suffered in an economic slowdown worsened by lesser government investment in computing and office automation business.
The company earned Rs 121.5 million for July-September, compared with Rs 474.6 million a year ago.
Net sales dropped 6% to Rs 2,788 crore.
“Their partnership with Nokia hurt. Nokia has not been doing well, and that pressured HCL’s margins. This impacts their distribution business,” said a Mumbai-based sector analyst.
HCL Info has earlier this year renewed an agreement with Nokia to distribute the Finnish firm’s devices. That partnership is due for renewal on 31 December, 2014.
A flood of cheap handsets from the likes of China’s ZTE and India’s Micromax is destroying Nokia’s top position in emerging markets, and as Asian handset manufacturers increasingly move to Google’s free Android software.
“The desktop market is also very slow. This used to be their bread and butter segment,” said the analyst, who declined to be identified.
HCL has a less than 10% market share in personal computers. Dell , Acer and Hewlett-Packard lead the Indian market, according to a report by researcher Gartner in August.
HCL Info posted a loss of Rs 6.8 million for its computer systems and services segment, compared with a profit of Rs 358.2 million a year earlier.
“Overall System Integration business continued to be severely impacted by slowdown in projects and customer decision cycles,” Chief Executive Harsh Chitale said in a statement.
Profit from the company’s telecommunications and office automation business also fell 16% before tax to Rs 452.5.
HCL Info shares, valued at about $300 million, were down about 3% at 63.40 rupees at 1:25pm.