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Eurozone faces new risks amid $13 billion Cyprus bailout
by Staff Writers
Brussels (UPI) Apr 19, 2013

India's Wipro Q4 profit up 17%, gives weak outlook
Bangalore, India (AFP) April 19, 2013 - India's third-largest software firm Wipro on Friday said net profit in January-March rose nearly 17 percent, beating forecasts, but projected weak revenue growth due to global uncertainty.

Consolidated net profit rose 16.7 percent to 17.29 billion rupees ($318 million) in the fiscal fourth quarter, from 14.81 billion rupees in the same period last year, based on international accounting norms.

Analysts had forecast net profit of 16.9 billion rupees in a poll by Dow Jones Newswires.

Revenue roses 12 percent to 110.26 billion rupees ($2.02 billion) in the quarter, of which IT revenues totalled $1.59 billion.

Wipro forecast revenues from IT services of $1.57 billion to $1.61 billion in the next quarter ending June which suggested relatively flat growth amid tough business conditions.

Wipro's chief financial officer Suresh Senapaty said currency volatility had "impacted" the March quarterly financial performance.

On the weak projected revenues, Senapaty said, "Typically the first fiscal quarter (April-June) is generally and historically weak, declining sequentially after a good growth in the fourth quarter."

He said that deals were expected to be finalised in the current quarter.

"That is why our confidence is little higher as to what we will deliver in the second fiscal quarter rather than in the first quarter," Senapaty told AFP.

The firm added 52 clients and 2,907 people to its staff in Jan-March.

Wipro said Friday it has secured a contract from a large unnamed Europe-based bank to build a testing unit to help it achieve higher production stability.

"The company disappointed, both in terms of margins and sales growth," Ankita Somani, IT analyst with Mumbai's Angel Broking, told television channels.

Earlier this week, industry leader Tata Consultancy Services posted a 22 percent jump in quarterly net profit to $661 million. But rival Infosys disappointed, announcing a small net profit gain and a lower-than-expected revenue outlook.

TCS, Infosys and Wipro lead India's flagship IT outsourcing industry, which carries out a wide range of jobs for Western firms such as answering calls from bank customers, processing insurance claims and software development.

Wipro has this month demerged its non-technology operations -- including consumer care, lighting, furniture, infrastructure and medical businesses -- into a separate, unlisted firm called Wipro Enterprises.

Earning from the April-June quarter will be released by Wipro as a standalone IT company, which chairman Azim Premji said Friday "will provide fresh momentum for growth".

IT services contributed 87 percent of Wipro's revenues in the financial year to March 2013, data showed Friday.

Analysts see the demerger as a positive step that will help the Bangalore-based firm focus on its core IT business and make it more competitive.

Wipro shares did not trade on Friday as Indian stock markets were closed for a public holiday.

The European Union faces new risks to its 17-member eurozone as a $13 billion bailout of Cyprus failed to calm fears, exacerbated by a Fitch downgrade of Britain.

Investors warned Europe in and outside the eurozone faced dangers similar to Latin America's sovereign defaults, state confiscation of deposits and other multiple crises of the last century which carried into 2002 in parts of that region.

The bailout has pitted Cyprus against new political challenges and several eurozone countries against national parliaments, which must approve their participation in the bailout.

Despite European Commission assurances the bailout would help Cyprus overcome the crisis, the island's political establishment faces new turmoil. EU officials hope an accord on the bailout will be signed this month and cash transfers to Cyprus will begin by mid-May.

The deal promises Cyprus the first tranche of the loan from the eurozone and the International Monetary Fund by next month. The Cypriot political scene is deeply fraught, however, and parliamentary approval is likely to see repeat of furious protests during a March debate.

As part of the deal Cyprus needs to raise $17 billion to qualify for the EU-IMF loan, another sensitive issue for Cyprus, which has been stripping state assets at home and abroad to meet terms of the rescue package.

Depositors in several Cypriot banks are set to lose huge chunks of their deposits, EU data indicated. Taxes are also set to rise further, and many welfare programs will disappear, including those run by churches, which have lost millions held in banks due to the restructuring and rescue package.

Expert warnings of a sharp contraction of Cypriot economy are already in place, with predictions of up to 9 percent shrinkage but new fears are focused on a potential new slump in Europe.

There are fears too that Italy may be next in line with a deeper crisis, partly because it has failed to pick a new government. The Italian economy, the third largest in Europe after Germany and France, is in deep recession.

The problems faced by Britain indicate the European crisis isn't confined to the eurozone. Fitch credit ratings agency downgraded the United Kingdom to AA+ citing a weakened economic outlook.

The move follows Moody's downgrade in February and has upset plans for London to attract more investors from the oil-rich Persian Gulf region through Islamic finance instruments.

Britain is also worried that European plans for a financial transactions tax will damage the City of London's financial status.

FTT which aims to raise public funds and encourage more responsible trading by financial institutions and is likely to be adopted in 11 EU states. London wants to block the tax entirely as it fears the tax will be levied on deals carried out even partly in London. FTT provisions state the tax will apply to any deal linked in any way with institutions from any of the 11 countries supporting FTT. The FTT provisions will also affect U.S. financial transactions.


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Outside View: Fresh evidence spring swoon grips U.S. economy
College Park, Md. (UPI) Apr 19, 2013
Fresh evidence is emerging that the U.S. economy is slowing in the second quarter. Stock prices continued to slide as earnings disappointed and the Conference Board's index of leading economic indicators pointed down. Next week the U.S. Commerce Department will likely report that gross domestic product growth rebounded from 0.4 percent in the fourth quarter to more than 3 percent in the ... read more

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