Bangalore: Shares of Mphasis Ltd, a mid-tier technology services firm majority owned by Hewlett-Packard Co. (H-P), dropped 5.45% on the Bombay Stock Exchange on Wednesday, after its US parent issued a disappointing outlook for the year. Around 70% of Mphasis’ revenue comes via H-P.
The Bangalore firm’s stock fell to Rs417.25 a share, while the benchmark Sensex shed 0.28% to close at 18,086.20.
The decline in Mphasis’ share price is linked to H-P “performing below street expectations and the likelihood of pressure on price negotiations with Mphasis going forward,” said Abhishek Shindadkar, an analyst with ICICI Securities.
Mphasis crossed the $1 billion (Rs4,510 crore today) mark in revenue with rupee revenue of Rs5,037 crore for its fiscal year ended 31 October.
A spokesperson for Mphasis said the company would not comment on H-P’s outlook or its stock movement, citing a mandatory silent period ahead of financial results.
H-P has lowered its outlook for 2011, which followed a leaked memo from chief executive Leo Apotheker asking his officers to cut expenses and warning of a tough quarter ahead. The company blamed falling personal computer sales and lower operating profits in services.
Mphasis, founded in June 2000, was acquired by H-P, the world’s largest technology company by revenue, when it bought Electronic Data Systems (EDS) for $13.9 billion in 2008. EDS had acquired a controlling stake in Mphasis in 2006.