Apr 26, 2001|
Digital : Good show
Digital has recorded a strong growth in revenues of 19% for 4QFY01 compared to 3QFY01. The QoQ rise in net profit is 12%. Though the performance in the Q4FY01was far subdued than that in 3QFY01, the company has still posted strong financials. The operating margins have fallen by 170 basis points compared to 3QFY01. The reduction in operating margins could be due to the fact that the business environment has toughened in the US and this might have put pressure on the billing rates. On a YoY basis for 4QFY01 the company has posted 200% growth in total income and a jump of 200% in net profits.
The offshore business of the company accounted for 34% of the revenues. The figure is quite low compared to other software companies. Therefore, there is a possibility that digital can increase the contribution of offshore revenues. This would result into better operating margins for the company. However, since 88% of its business comes from Compaq how much of the business can be shifted offshore is doubtful as service offering might require onsite presence.
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The company added ten new clients during the 4QFY01. Bringing the total number of non-Compaq clients to 30.
Digital established an enterprise solutions business unit. This will help Digital provide a wider portfolio of services. The enterprise solutions business is one of the largest segments in the software market.
For FY01 the company has shown a strong growth of 200% over 9mFY00 figures. The FY00 figures are for nine months as Digital changed it business from that of hardware to software services. On FY00 figures annualised Digital has shown a growth of about 125%. During the course of the year Digital has managed to improve operating margins by 270 basis points. One of the objectives of the company was to de-risk the client concentration. In this area the company has not managed to make significant progress. However, the company has conistently shown efforts to get business from non compaq sources.
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