Infosys guidance no more bellwether of IT forecast; Analysts say co should stop confusing investors

BANGALORE: Infosys, whose earnings guidance has for long been regarded as the software industry's bellwether, has of late been resembling India's weather department. Its forecasts are now seen as being as unreliable as the monsoon predictions of the Indian Meteorological Department. With its reputation for consistency in jeopardy, many voices on the Street are now suggesting that Infosys should consider giving up making forecasts in the interests of not confusing investors and analysts who rely on the company's guidance to gauge the pulse of the industry. In a recent client note, Kotak Institutional Equities said Infosys is likely to consider 'no guidance' as an option for FY13. With the increase in volatility in its major markets, the range of Infosys' guidance has also increased, prompting analysts to say it might be better to give no guidance than give an abnormally large range. In the past five quarters, Infosys missed the upper end of its revenue growth guidance thrice in constant currency terms, shows an analysis by US brokerage Jefferies & Co. Once it missed the lower end of growth forecast range.