Normally, the likes of Infosys Technologies and Microsoft Corporation cannot be compared: They are in different businesses and different size paradigms. On initial assessment, perhaps the only similarity one can draw between the two is that they are both companies involved in some way with information technology.

This involvement with information technology alone is reason enough to attempt a comparison of the discounting these scrips enjoy in the market and to make an informed guess as to why a company attracts better investor attention. Our list includes Infosys Technologies which has just been listed on the Nasdaq, Cisco Systems, Microsoft Corporation, Apple, Dell Computers and IBM. On the basis of the price/earnings ratio these companies enjoy, it can safely be said that Infosys, Dell andCisco Systems enjoy a greater investor patronage than the relatively larger and better known IBM, Microsoft and Apple. Let us try and understand why this is so.

Let us first consider the case of Cisco Systems. The company posted an earnings per share (EPS) of $0.64 for the year ended July 1996 which grew by about 11 per cent to $0.71 in the following year. For the year ended July 1998, the growth in EPS was an impressive 24 per cent. The investing public has perhaps noticed that the company is on a strong growth path (reflected in the doubling of the EPS growth rate) and appears to believe that it will continue to grow at a faster pace in the years to come. Therefore, the high discounting of 128.

If one were to generalise the investor perception for hardware companies, it would invariably turn out to be that they would rather consider making an investment in predominantly software-oriented companies. However, when one considers the case of Dell Computers this generalisation does not appear to be true. Thescrip is a market favourite and the reason can be found in the high rates of EPS growth recorded by the company. For the period 1996-97, it had a 108 per cent EPS growth to $0.75 and in 1997-98 the growth was 92 per cent. Clearly, the company has managed its resources well and therefore deserves to be rewarded. Though future growth rates may be slightly lower, they would still be very high compared to others.

Using a similar analogy, the low discounting for both IBM and Microsoft appears to be perfectly justified considering that their EPS growth rates for 1997-98 have been less than half those recorded in the previous year. It appears very likely that this trend of falling rate of earnings growth will continue well into the future. Though Infosys Technologies may not enjoy the status of a superior technology company possessing well established brands, it has proven that it can still make its investors richer doing "body-shopping" as some may prefer to put it. For the year 1996-97, its EPS grew by 27 percent to $0.60. The following year the growth was higher at 35 per cent.

The investor is merely interested in getting superior returns on his investments and it is only logical that they will continue to flock to those companies in which they see a good growth potential. For Infosys, the Nasdaq listing marks the beginning of a new era and throws up new opportunities. It is therefore only logical to expect the coming years to be even better for the company. The current year too has been a good one so far, lending credence to the theory. The relatively high discounting that the scrip is now enjoying is therefore likely to continue.