L&T Technology Reports Q1 FY21 Results Medical and Telecom & Hitech Segments Show Resilience, Announces Acquisition of Orchestra

L&T Technology Services Limited (BSE: 540115, NSE: LTTS), India’s leading pure-play engineering services company, announced its results for the first quarter ended June 30, 2020.

Key financial parameters for Q1FY21:

USD Revenue at $171 million

Revenue at ₹12,947 million; down 4% YoY

EBIT margin at 12.1%

Net profit at ₹1,173 million; down 42% YoY

 

LTTS has executed a definitive agreement to acquire 100% stake in Orchestra Technology, a specialist technology solutions provider for the Telecom industry. Orchestra is based in Texas, USA and will enable LTTS to strengthen its capabilities in network engineering and modernization.

“With many industries operating at limited capacity on account of the pandemic, Q1 was a challenging quarter as expected. Still, we had a good performance in two of our segments - Telecom & Hitech and Medical, and our large deal engine continues to churn wins. Free cash flow generation was strong during the quarter and the healthy cash position sets us up well for the future.  Looking ahead, we see a path for recovery backed by good order bookings and a healthy pipeline. We expect both revenue and operating margin to show sequential improvement over the remaining quarters of the current fiscal.

The acquisition of Orchestra will enhance our offerings in the areas of Network Engineering & Enterprise Mobility and provide us strategic access to Telecom service providers who are investing in next generation digital systems for 5G and IoT networks.

As customers redraw their business plans, we are working with them to improve operating efficiency, finetune sourcing and production plans, and prepare for faster go-to-market.  Our newer set of offerings like Frugal Manufacturing, Telehealth solution and i-BEMS Shield are seeing good traction in the market. The large deal discussions we are having with customers are a notch higher in terms of criticality and adoption of new age technologies, which we believe will pave the way for greater mind share and competitive differentiation”, said Dr. Keshab Panda, CEO & Managing Director, L&T Technology Services Limited.

During the quarter, LTTS won 9 multi-million dollar deals across all major industry segments which includes one deal with TCV of USD30mn plus and two deals with TCV of USD15mn plus. On a YoY basis, LTTS has increased its USD10mn+ clients by 5 and its USD1mn+ clients by 3.

Industry Recognitions:

* TechCircle honored LTTS with the Business Transformation Award in the “New Markets” category to our IT and HR functions jointly for leading digital transformation at LTTS with innovative solutions.

* Enterprise IT magazine conferred LTTS’ IT Team with the “COVID-19 Super Hero Award” for their tireless efforts to help LTTS’ workforce during lockdown.

Patents

At the end of the first quarter, the patents portfolio of L&T Technology Services stood at 525, out of which 385 are co-authored with its customers and the rest are filed by LTTS.

Human Resources

At the end of Q1FY21, LTTS’ employee strength stood at 16,641.

Why is Sun Micro losing $100 mn a month?

Oracle Corp Chief Executive Larry Ellison said Sun Microsystems Inc is losing about $100 million a month as European regulators delay approving his company's $7 billion purchase of the struggling hardware maker.

"The longer this takes, the more money Sun is going to lose," Ellison said on Monday evening during a dinner at one of Silicon Valley's most prominent speaker's forums, the Churchill Club.

Sun's revenue has tumbled since April when Oracle agreed to buy the world's No. 4 computer server maker in April as rivals IBM and Hewlett-Packard Co have poached customers amid uncertainty about its future.

Oracle has pledged to boost investment on development of Sun's products, but the hardware company has cut spending prior to the deal's closing as sales have plunged. Last month it reported a quarterly loss of $147 million.

Ellison, the world's fourth-richest man according to Forbes, said he expects the deal will eventually be cleared by European regulators as it was in the United States, without any conditions.

The European Commission is conducting an in-depth probe into whether the competition would be stifled by the combination of Oracle's database, the world's top seller, and Sun's MySQL database, which is widely used to run popular websites.

Legal experts have said Oracle may need to make concessions, including the divestiture of the MySQL software business, and that it is unclear how long European approval would take.

European regulators have until January 19, the deadline set by the Commission, the competition watchdog of the 27-country European Union. That would put Oracle months behind its original plan for closing the deal by the end of August.

Agencies

Will $3.9b Dell acquisition of Perot Systems payoff?

Dell agreed to buy Perot Systems for $3.9 billion, undertaking its biggest purchase ever to compete with International Business Machines and Hewlett-Packard in computer services. Dell, the second-biggest maker of personal computers, offered $30 a share in cash, about 68% more than Perot’s closing price September 18. The acquisition probably will boost profit in fiscal 2012, Round Rock, Texas-based Dell said in a statement on Monday.

Chief executive officer Michael Dell is pushing into computer services as consumers and companies curb PC purchases to cope with the economic slump. Larger services units helped IBM and Hewlett-Packard withstand the recession better than Dell, whose sales slumped 22% last quarter. The new services business would have annual sales of about $8 billion.

“This significantly expands Dell’s enterprise-solutions capabilities,’’ CEO Dell said in the statement. “The acquisition makes such great sense because of the obvious ways our businesses complement each other.’’

Once the transaction is complete, Perot Systems, based in Plano, Texas, will become Dell’s services unit. The purchase price is more than twice what Dell paid last year for EqualLogic, which was the computer maker’s biggest acquisition until now.

Perot Systems jumped as much as $11.89, or 66%, to $29.80 in trading before US exchanges opened. Dell, which ranks second to Hewlett-Packard in PC sales, fell as much as 5.6% to $15.75.

The acquisition of Perot, founded by former presidential candidate H Ross Perot, mirrors Hewlett-Packard’s purchase of Electronic Data Systems for $13.2 billion last year. EDS, the world’s secondlargest computer services provider after IBM, helped Hewlett-Packard increase services revenue 93% last quarter. Sales in the PC unit fell 18%.

Dell has relied on cost reductions to help prop up profit amid the recession. The company, aiming to save $4 billion a year, has farmed out 40% of manufacturing. Still, profit dropped 23% last quarter. Perot, which sells services to industries including health care, reported an 11% drop in sales and a 3% gain in net income last quarter. The company expects to benefit from the US government’s plans for electronic health records, Peter Altabef, CEO of Perot, said in an April interview. IBM’s sales fell 13% last quarter, while Hewlett-Packard’s total revenue dropped about 2%.

The companies have benefited from long-term services contracts to maintain corporations’ computers and networks. The Perot acquisition, while not subject to a financing condition, will need government approvals and the satisfaction of other conditions, Dell said. Dell to acquire x for $3.9bn.

Agencies

Arabic portal Maktoob acquired by Yahoo!

Internet major Yahoo! Inc. today announced that it has entered into a definitive agreement to acquire Maktoob.com, an online community in the Arab world, with more than 16.5 million users. Though the transaction is expected to be completed in the fourth quarter of 2009, the financial details of the deal is not yet known.

"This acquisition will accelerate Yahoo!'s strategy of expanding in high-growth in emerging markets where we believe Yahoo! has unparalleled opportunity to become the destination of choice for consumers," said Yahoo! chief executive officer Carol Bartz in a statement.

According to Yahoo!, this acquisition will extend its current offerings by adding capabilities to deliver relevant Arabic-language content and services, as well as Arabic versions of Yahoo!'s popular Yahoo! Messenger and Yahoo! Mail services.

"Yahoo! and Maktoob are natural partners and this combination should help energize the Internet market in the region as a whole. We are excited about Yahoo! building a stronger presence in the Middle East and bringing its compelling suite of services to Arab users in Arabic," said Samih Toukan, founder of Maktoob.

While Internet usage in the Middle East has grown more than tenfold since 2000, most markets are still in the early stages of adoption. According to the World Bank, there are more than 320 million Arabic speakers worldwide, while less than one per cent of all online content is in Arabic, said the Yahoo press release.

Maktoob.com was founded in 2000 by Samih Toukan and Hussam Khoury as the world's first free Arabic/English Web-based email service, and since then has grown to be the leading Arab online community in the region.

Keith Nilsson, senior vice president, Emerging Markets, Yahoo!, said, "We see great growth potential in both audience and advertising in the Arab world and combining with Maktoob.com will allow us to quickly build our presence there with high quality products. This is a big win for publishers, advertisers, and consumers in the region."

Yahoo said this acquisition is part of its larger strategy to grow its business throughout the world's emerging markets by connecting consumers with the content and services that matter most to them in their local language.

Following the acquisition, Maktoob.com will become a wholly-owned subsidiary of Yahoo!. Ahmed Nassef, the current general manager of Maktoob.com, will continue to lead the Maktoob.com teams and will report to Keith Nilsson, said the release.

Agencies

Software to reduce non-compliance risks

Hewlett Packard (HP) plans to unveil a new document and records management software - TRIM - aimed at reducing an organization's risk of non-compliance with legislative and regulatory requirements over the next few months in India.

Talking to CXOtoday Kris Brown, TRIM marketing manager, HP APAC, said, "We are likely to roll out the software in the coming months and will start with the manpower for sales force and also the training. The software was originally developed in Australia and later acquired by HP."

Globally, there are more than 20,000 regulations that businesses need to comply with, including the significant legislations such as Sarbanes-Oxley, HIPAA and BASEL-II. In India, specific regulations mandate on how companies manage and store their information, including the IT Act, Indian Evidence Act and SEBI Clause 49, but most of them are not enforced yet by the Indian government, said Brown.

Meeting these guidelines also increases the return on investments for any organization, Brown said.

HP TRIM software is a best-practice document and records management system (DRMS) that reduces your risk of non-compliance with legislative and regulatory requirements while increasing security, data integrity, productivity and accountability.

In India, HP is targeting Central and state government departments, public-sector undertakings (PSUs), organizations and banking and financial institutions.

HP's Bangalore lab, which has been doing software development for the information management and achieving, will also handle the customization of the TRIM software as well.

CXOtoday.com