Will Kyocera Wireless India be acquired by MindTree

MindTree Ltd said on Tuesday it would buy Bangalore-based Kyocera Wireless India Pvt Ltd and make an upfront payment of $6 million, while
further payments will be linked to revenue in FY11 and FY12.

The IT firm expects the acquisition to contribute about $9 million in revenues for the period Oct 2009 to March 2010, with profit after tax expected to be in the range of 13-15 percent, it said in a statement.

Agencies

Is Xerox set to acquire ACS for $6.4 in 2009?

Xerox, the global copier and imaging giant, will pay $6.4 billion to acquire the outsourcing company Affiliated Computer Services, expanding its foothold in a growing industry, the companies said.

Xerox, based in Norwalk, Conn, is paying $63.11 a share in cash and stock for ACS, which posted revenue growth of 6% and new business signings of $1 billion in annual recurring revenue during its fiscal 2009.

“We’re creating a new class of solution provider,” Xerox’s chief executive, Ursula M Burns, said in a statement, adding that the deal was “a gamechanger for Xerox.” She estimated the company’s revenue from services would triple to $10 billion next year from $3.5 billion in 2008. Lynn R Blodgett, ACS’s chief executive, said in the statement that the deal was necessary “to expand globally and differentiate our offerings through technology.” ACS will continue to operate as an independent organization. Blodgett will remain as chief executive, reporting to Burns.
It was the first major deal for Burns, who took over Xerox in July with the retirement of Anne M Mulcahy.

Owners of ACS stock will receive $18.60 a share in cash and 4.935 Xerox shares for each ACS share. Xerox will assume $2 billion in ACS debt and issue $300 million of convertible preferred stock to ACS’s Class B shareholders. ACS had a market value Friday at the close of trading of $4.6 billion. Xerox said the transaction would add to profit in the first year on an adjusted-earnings basis.

ACS, based in Dallas, specializes in outsourcing processes for industries including telecommunications, retail and financial services and health care, and describes itself as the largest provider of managed services to government entities in the United States. The companies estimated the market for so-called business process outsourcing at $150 billion, growing at a rate of 5% a year.

JP Morgan Chase and Blackstone Advisory Partners acted as financial adviser to Xerox, while Citigroup Global Markets served as financial adviser to ACS

Agencies

Will Twitter permit ads on website?

Twitter, the fastgrowing microblogging site now seeking ways to make money, expanded its terms for users to allow advertisers to reach the site’s more than 45 million monthly visitors.

Twitter, that lets people send an unlimited number of 140-character messages, is just now beginning to ramp up efforts to monetize, or gain revenue from, its popular site.

On Thursday, it revised its “terms of service” to specify that it may run ads. “We leave the door open for advertising. We’d like to keep our options open, as we’ve said before,” founder Biz Stone wrote on Twitter's official blog.

Advertising revenue is the time-honored way for websites to generate revenue while remaining free for users. Explosive growth in social networking is attracting interest: worldwide unique visitors to Twitter’s site reached 44.5 million in June, up 15-fold year-over-year.

Agencies

IBM, Google, Oracle, Microsoft suggest newspapers ways To generate net revenue

Some of the world’s most prominent technology companies are offering suggestions to publishers on how they can charge readers for news online.

IBM, Microsoft, Oracle and Google — a company some newspapers blame for helping dig their financial hole — responded to a request by the Newspaper Association of America for proposals on ways to easily charge for news on the web.

But building the infrastructure for charging readers is one part of the equation. The other part looks more challenging: getting publishers to make the leap and stop giving news out for free on the web.

Randy Bennett, the senior vicepresident of business development at the newspaper association, said his group initiated the process after a meeting of publishers in May near Chicago. A report that was posted online on Wednesday by the Nieman Journalism Lab at Harvard University includes 11 different responses from technology companies. Google’s proposal may be the most eyebrow raising, if only because the company — which aggregates thousands of articles from media outlets on its news pages — is so closely associated with the freewheeling ethos of an open internet.

Google proposed offering news organizations a version of its Google Checkout system, which is used for processing online payments. It would give readers a place to sign in to an account and then pay for media from a variety of sources without having to punch in their information over and over. And the company says it could offer publishers several pay methods, from basic subscriptions to socalled “micropayments” on a perarticle basis.

Along with the technology heavyweights offering ideas are tiny startups. CircLabs, run by just four people and incubated at the Missouri School of Journalism, is developing a program that would feed news from different sources into a bar across the top of web browsers. Martin Langeveld, the company’s executive vicepresident, said the application will offer both targeted advertising and the option of charging.

Agencies

Can TCS earn $1 bn revenue from domestic market?

Country's top software exporter Tata Consultancy Services said that it aims to double its revenues from the Indian market to $1 billion in the next 3-4 years.

"India has been one of the important markets. We are looking at whether in next 3-4 years we can double our revenue to billion dollars in the Indian market," TCS CEO S Ramadorai said.

At present, the domestic market contributes 10 per cent to the total revenue.

"Every mission mode project (government) that would come on the radar, we will certainly bid for them. TCS is in talks for 3-4 such mission mode projects as of now," Ramadorai said.

"When we look at the domestic market we look at three pillars -- large enterprises, governments - both the central and state governments -- and the third is the small and medium businesses which are part of our overall growth," he added.

Of the three, he expects the large enterprises to contribute more than the other two, followed by the government and the SMB sector.

Agencies

17% drop in the semiconductor revenue in 2009

The global semiconductor revenue is on course to total $212 billion in 2009, which is a 17.1 percent decline from 2008 revenue of $255 billion reveals a report. The report by research and analysis firm Gartner says that the projection is better than the second quarter projections of a 22.4 percent decline, which shows signs of recovery in the market.

Some of the major semiconductor vendors have reported positive second quarter sequential revenue growth. Intel posted 12 percent revenue growth, while Samsung announced its revenue increased by 30 percent and Qualcomm reported a 35.7 percent increase in its mobile chip sales. "The semiconductor market has performed better than expected, as was evident when second quarter semiconductor revenue increased 17 percent in sequential sales," said Bryan Lewis, Research Vice President at Gartner.

The increasing demand for products using semiconductor was the key driver behind the growth in the market. "Consumers reacted strongly to reduced PC and LCD TV pricing as price elasticity was amazing. The industry also benefited from the China stimulus package that worked remarkably well to boost short-term demand. Governments worldwide took action quickly and extensively to avoid a meltdown and it worked," added Lewis.

Though, the outlook for 2009 has improved, Gartner also points out that all major segments of the semiconductor market are expected to report double-digit revenue declines this year. The application-specific standard product (ASSP) - the largest segment in the semiconductor market - will touch $57.2 billion in 2009, a decline of 16.5 percent over last year's revenue. The memory market is predicted to total $41 billion with a 13.5 percent decline and the microcomponents segment is forecasted to reach $39.4 billion in 2009, a 19.2 percent decline from 2008.

According to Lewis, foundries are concerned that demand may drop off more than seasonal in the fourth quarter, and it may carry into first quarter 2010. Gartner's most likely scenario is a negative five percent growth in the first quarter of 2010, as customers take a break and absorb all the devices they purchased over the previous three quarters.

Agencies

Will MindTree touch $1 bn revenue by 2014?

Mid-sized software services firm MindTree, which completed 10 years on Tuesday, will come up with newer strategies as it aims to achieve over $1 billion in revenues by March, 2014. The company, which counts steel-maker Arcelor Mittal and Swedish truckmaker Volvo among its top customers, will be focusing on areas like energy, defence and healthcare. The firm is also targeting newer geographies like Japan.

“We are making strategic investment in defence, working along with DRDO and focusing on areas which deal with the surveillance space. There isn’t much revenue contribution right now, but the potential in long run is great” , said S Janakiraman, president and CEO, R&D services and one of the 10 co-founders of MindTree. MindTree is also building video surveillance , analytics solutions and new telemedicine solutions for the burgeoning rural healthcare market. “We recently had a major win from an Apac telecom firm and an European consumer appliance company. The size of the contracts is worth $5-6 million”, he said.

Mr Janakiraman said that MindTree will be the fastest growing company once the recovery happens as they are making more investments for innovations. “The 15% salary cut of 200 employees out of 8,000 will be immediately restored once business picks up”. MindTree has also bagged a contract for IT services from Swift, the financial messaging provider, and has plans to tap energy sector.

“We have put the team in place and are talking to large energy companies in Europe and the US,” said Anjan Lahiri, president and CEO, IT services and one of the co-founders of MindTree.

Agencies

Why Indian Internet startups fail to meet VCs expectations?

Internet Services companies in India are one of the largest venture capital [VC] funded companies in India. However, these firms have not delivered as per the expectations of the VCs. "With broadband penetration and PC affordability still an issue, internet companies have not met the expectations we had set two years back," said Sachin Maheshwari, Principal at Draper Fisher Jurvetson [DFJ] India. DFJ has funded many Internet startups like naseeb.com and seventymm.com. VCs had earlier expected the number of internet users in country to grow to 80 million by 2012. But so far it has just reached 40 million and therefore the traffic is too low to generate good revenue.

Many internet companies rely on online advertisement for revenue. They might find it difficult to survive due to low internet users. The internet advertisement revenue in country is $200 million, but majority of it is generated by Google. Few VCs feel that internet companies have not found the correct business model. "The business models that work abroad do not necessarily work in India," says Ritesh Banglani, Senior Investment Advisor, IDG Ventures India.

According to Alok Mittal, General Partner, Canaan Partners, the most successful internet companies in India are subscription based or lead generating like Naukri.com. But despite not meeting expected results, internet companies are still amongst the most favored by VCs. "We expect these companies to do better as when the internet penetration picks up and monetization models are clearer," said DFJ's Maheshwari.

According to Venture Intelligence, 21 percent of the VC deals struck between July 2008 and June 2009 were in internet services. The value of these deals was around $120 million.

Will telecom BPO revenue to touch $2 Billion in 2012?

The outsourcing revenues from the telecom sector in India are set to grow at a CAGR of 31 percent to nearly $2 billion in 2012, says a report by Ernst & Young in a first of a kind study on potential of domestic BPO industry. The telecom industry has been growing fast in spite of recession adding around 10 million subscribers every month with a subscriber base of 375 million in 2008-09.

In 2005, Bharti Airtel, which has been growing at a Compound Annual Growth Rate [CAGR] of 41 percent in last two years, started the trend of outsourcing its call center to other global companies like Mphasis, IBM Daksh, Teletech and HTMT at $272.2 million. Since then there is pressure on other telecom providers to do the same. "This domain (telecom) has already witnessed a couple of large outsourcing deals in recent months and the trend is expected to continue," said Ernst & Young partner Milan Sheth. In 2008, Telecom revenues added upto 50 percent of the domestic BPO revenues at $661 million.

BPO is also a huge job creator for telecom industry. According to the study, in 2008 telecom BPO hired over 1,22,440 people and by 2012 this number is expected to double. Banking is the second biggest employment generator for domestic BPOs. The banking sector employed around 70,100 people in 2008 and by 2012 this is projected to go up to 2,25,900. The two sectors contribute 80 percent of the domestic BPO revenues and is expected that revenues will reach $6 billion by 2012.

According to the report the key driver for BPOs in telecom is demand for customer care and sales and marketing services.

Agencies

India's IT export target of $50 bn will be delayed, says NASSCOM

IT industry association NASSCOM said the export revenue target of 50 billion dollar by 2010 will be delayed by 3-4 quarters due to the global economic downturn, and warned of uncertainties in the near future.

The NASSCOM-McKinsey, however, presented an ambitious scenario for the Indian IT industry for the next 11 years saying the total revenue from export is expected to expand to 175 billion dollars by 2020 and revenues from the domestic market could achieve the 50 billion dollar mark.

"This, however, needs a concerted effort by both the industry and the government to ensure swift and sustained reforms in critical areas of education and infrastructure," NASSCOM said.

On the economic scenario, the organisation said the "global economic crisis will have far-reaching and as yet uncertain impact on the industry. Near term volumes and pricing is likely to come under pressure."

Commenting on the opportunities for the industry, Som Mittal, President, Nasscom, said, "The Indian IT industry is in the midst of unprecedented times because of the current economic environment. We expect the next few quarters to be extremely challenging with companies doing everything required to effectively overcome the challenges."

NASSCOM is of the view that the 2020 business landscape would be different from the one that was witnessed in the last decade as now it would be driven by global megatrends.

There are likely to be new verticals in the public sector, healthcare, media and utilities (which have adopted global sourcing only to a limited extent) along with new customer segments in the small and medium businesses.

"These new opportunities will result in export revenues of 175 billion dollar by 2020. On the back of these megatrends the Indian domestic industry too will experience significant growth and record a four-fold increase in revenues from 12 billion dollar in 2008 to 50 billion by 2020," it said.

"80 per cent of the incremental revenue growth by 2020 will be driven by opportunities outside of the current core markets, verticals and customer segments and the industry needs to redefine its value proposition to capture these," Mittal said.

The NASSCOM-McKinsey report said that India has been the destination for global sourcing over the last 10 years and has garnered a 51 per cent share of the industry today. India continues to be the most competitive among 25-30 low-cost locations even today.

Agencies

Will Cisco layoff 6,600 employees?

Is it pinkslips time at Cisco? Predicting a significant drop in revenue for the fourth quarter, a JP Morgan analyst has reported that Cisco Systems Inc "could" soon announce a workforce reduction of 10 percent (this could be equal to about 6,600 employees).

In his 49-page first-quarter 2009 preview of communications equipment and networking companies, analyst, Ehud Gelblum, of JP Morgan wrote, "We expect Cisco to guide fourth fiscal quarter revenue down 17-22%, year over year, as demand continues to deteriorate, in-line with our estimate for a 21 per cent year over year decline," "We believe Cisco could also announce a 10% headcount reduction, which we calculate could save $900M annually," he wrote.

The recent lowering of sales projections by two of Cisco's competitor's Juniper Network and F5 Network has led to a similar speculation about the company.

Cisco spokesman reportedly refused to comment on JP Morgan report directly. However, in a statement he said that on our fiscal second quarter 2009 earnings call in February we discussed a limited restructuring where we could in the near term see a total reduction of between 1500 and 2000 jobs company wide. This does not represent a broad-scale layoff in our workforce.

The spokesman added that this limited restructuring is part of our ongoing, targeted realignment of resources. While Cisco constantly manages its business priorities, resources and overall employee alignment as part of our overall business management process, we are sensitive to the impact these decisions have on employees during this challenging economic environment. We are doing everything possible to minimize the impact on employees affected by the limited restructuring.

Indiatimes

GlobalLogic records impressive growth in 2008

GlobalLogic, the global leader in product development has announced that it continued to experience solid momentum and growth during the third quarter (the company’s fiscal second quarter) ending September adding 25 new technology clients representing the mobile, healthcare, consumer and enterprise software product verticals.

The company’s revenue increased 40% through the first six months of its fiscal year, with GlobalLogic exceeding $100M in revenue for the first time. In addition, GlobalLogic grew its employee base nearly 20% during the quarter, reaching 3,000 employees worldwide. Despite the global economic slowdown, its business outlook remains promising and robust. GlobalLogic expects to continue its quarter over quarter growth.

“Considering the current downturn in the economy and its potential effects on global markets, GlobalLogic’s specialization in full software product development lifecycle services is a relatively strong sector to be in,” explained GlobalLogic CEO Peter Harrison. “Our technology clients, both early stage and established, are able to utilize their GlobalLogic partnership to attain product quality, economy and time-to-market benefits through access to our product engineering centers in the US, India, Ukraine and China.”

Other key milestones for GlobalLogic in the first half of its fiscal year, April-September, 2008 included:
* Expansion including Ukraine, where GlobalLogic is the largest technology employer, China and Israel
* Significant new client wins with Microsoft, Yahoo, Qualcomm, JDSU, Genband and Avid
* Industry recognition for GlobalLogic’s Agile-based Version 1.0 service at innovation conferences such as Demofall2008; Dataquest and Hewitt Associates for Top Employer in India and Ukraine; and Microsoft partner of the year in Central and Eastern Europe
* World-class, public markets experienced executive team additions including CFO Wayne Grubbs, and President Shashank Samant