Delay in closing deals with IBM drags HCL profits by 10%

HCL Technologies on Wednesday posted a 10.1% decline in year-on-year profits due to a delay in closing the $1.8 billion acquisition of seven IBM products by a month. The Noida-based firm said its net profit for the quarter ending June 30 came at $320 million, which was down 12.3% sequentially.

The acquisition, which was supposed to be closed on June 1, was completed by July 1 which resulted in the company “carrying the cost” of it. The delay along with other factors such as onsite hiring and more investments in engineering and R&D services also pulled the company’s margins by 180 basis points to settle at 17.1%.

Despite the delay, the company’s management is confident of meeting its revenue growth guidance of 14 to 16% in constant currency terms along with operating margin of 18.5% to 19.5%.