E Terrorism By Truck; Diplomacy By Insult

Theresa May is taking a lesson from Lyndon Baines. Johnson by giving the Brexit Tories so many jobs in her cabinet, starting with the appalling Boris Johnson as Foreign Minister. This is causing all those he has insulted in the past to recoil: women like Hillary Clinton (whom he compared to “a sadistic nurse in a mental hospital”); African-Americans like Pres. Obama (accused of moving out a Churchill bust from the Oval Office because of “his part-Kenyan ancestral dislike of the British Empire”); other Blacks who are “piccaninies”; Turkish President Recep Erdogan (who “sowed his wild oats with the help of a goat”). This despite being of part-Turkish ancestry himself and, at the time, a dual national holding a US as well as a UK passport.

Cheer up, Boris also insulted his fellow big-mouthed blond politician with a weird haircut: “the only reason I wouldn’t go to some parts of New York is the real risk of meeting Donald Trump.”Boris and other supporters of Britain leaving the European Union have all been given jobs working on Brexit, meaning they will have to produce the good results their rhetorical fantasies promised during the referendum campaign.

Or to quote US President LBJ, “it is better that they are in the tent pissing out rather than outside it pissing in.” The leave campaigners now have to negotiate better terms than former PM David Cameron was offered—or face an end to their political careers, starting with Boris. Promises about how leaving the EU would allow stiff immigrant control, financial service passporting, less regulation, more free trade with non-EU countries, faster economic growth, more money for the National Health Service, whatever, will have to be fulfilled by those who made the promises.

You don’t need guns to murder people, as was shown by a truck-driver terrorist in Nice during the Bastille Day festivities which at last count killed 84 people and wounded a hundred more.

Info on INFY

*Infosys (INFY) reported under International Financial Reporting Standards on its Q1 to end-June to end. The 2^nd largest Indian internet outsourcing and services company produced mixed results. Revenues at $2.501 bn were up 2.2% quarter/quarter in US$, but only 1.7% in constant currencies. Compared to Q1 2015, the year/year rise was 10.9% in dollars and 12.1% in constant currencies. That’s the good news.

Operating profit in the June quarter fell to $601 mn, down 3.7% q/q, but up 11.3% y/y failing to match sales. Net profit at $511 mn was down 4.1% sequentially and up only 7.4% y/y, showing that higher sales did not pay off. EPS was 22 US cents in the quarter, with the same drops.

INFY proudly announced that it has added three more $100 mn-plus clients to its roster, now at 17.

CEO Dr. Vishal Sikka, was granted stock options grants worth $2 mn which will be paid over on August 1, to vest over the next 4 years. Sikka commented on the results: “We had unanticipated headwinds in discretionary spending in consulting services and package implementations as well as slower project ramp-ups in large deals won in earlier quarters, resulting in a lower than expected growth in Q1.” Dr Sikka said not to blame him for this, but to pay out handsomely for his management brilliance all the same. He nonetheless claimed to be “very encouraged by our progress in the execution of our strategy”.

Commented our India reporter, Abhimanyu Sisodia:

“Results were below street expectations, as analysts expected declines in the 2-2.5% range. While most brokerages seemed satisfied with results, they compares badly to the to 3.7% sequential growth at rival Tata Consulting Services, TCS’s highest ever. The biggest disappointment was INFY slashing its revenue growth guidance for this year to 10.5-12% from 11.5-13.5%, barely higher than industry body Nasscom’s guidance of 10-12%. This makes it unlikely Sikka can meet his ambitious target of achieving $20 bn in revenue by 2020.

“Headwinds included lower discretionary spending in the consulting services vertical which cost INFY a whole percent of growth, plus macroeconomic uncertainties.

“Also hurting are higher visa costs and some obscene wage hikes [ed: including Sikka’s.] While the employee utilization rate improved to 76.5%, up from 74.7% sequentially, attrition spiked to 21%, up from 17.3% in Q4 FY 2015-6 and from 19.2% in its Q1. To keep staff, INFY relaunched an ESOP for junior and middle level managers.

“Attrition is a concern not only because it’s a critical measure of health in an industry driven by people, but also because of the senior level exit. Several other senior level employees also exited since Sikka began his tenure. INFY hired 3,006 employees during Q1, taking the total to 197,000.

“Old economy energy, utilities, and communication service sales grew fastest, up 3.1% q-o-q. Manufacturing contracts rose 2.9%. But the key financial services segment grew only by 2.2%. according to the CEO’s statement.

“By region North American and European sales grew 2.5% and 0.6% sequentially, with Indian actually declining by 7.6%. INFY has been thrifty, with sales expenses rising 1.2% while administrative ones declined by 2.2% sequentially. Controlling this boosted the INFY margin which nonetheless contracted by 1.38% to 24.12%.

“While this was a disappointing quarter, INFY should resume the consistent growth momentum shown over the past year. Bombay pushed the shared down 8% when the results were published, also influenced by the ouster of INFY’s AI head.”