Ahead of Infosys Technologies? announcement of its first quarter results for the 2009-10 fiscal on Friday, analysts have projected a flat to lower earnings by major IT firms. However, all eyes would be on the outlook given by the firms in their earnings statement.

Analysts expect companies to meet their guidance and expect a flat to 2-3% decline in revenues in dollar terms on an average for the top four IT companies ? TCS, Infosys, Wipro and HCL Tech. Though companies like TCS have gone on record to state that decline in global demand for outsourcing has been ?arrested?, rate cuts and current headwinds continue to exert pressure on margins.

According to a report by brokerage firm Angel Broking, Infosys is expected to report a 284 basis point (BP) decline in margins sequentially while margins of TCS and Wipro are expected to fall by 239bp QoQ and 101bp QoQ, respectively. On the other hand, HCL Tech?s margins are projected to rise by 90bp sequentially. ?This is on back of the Axon acquisition, which has now started bearing fruits,? said Harit Shah, an IT analyst with Angel. ?

According to market analysts, pricing pressures, which have haunted IT companies for the last few quarters, are likely to continue to have an inverse impact though not at the same levels as before. ?We expect companies to report either flat or marginal decline in pricing. However, considering that most companies have not given hikes this year, which usually happens in this quarter, would prove to be a saving grace,? said an analyst with a brokerage firm.

This time results and the management commentary will be a keenly-watched affair, said another analyst, as it will provide guidance as to what the future looks like. ?There has been some talk about green shoot of recovery, the number of deals, pricing and repeat business will all be key to ascertain how much of it actually happening,? he added.

During the quarter, the rupee appreciated by 2.2% as against the greenback, on the quarterly average rate. Moreover, the euro gained around 4%, the British pound 7% and the Australian dollar a significant 12.3% as against the US dollar.

The cross-currency movements are likely to play out in favour of software companies and will reduce their forex losses, which have been denting profitability of most IT companies for the last few quarters. ?Forex losses will continue this quarter too, though they could be at the same level or even be slightly lower,? said an industry analyst.

One of the biggest highlight of the quarter has been BSE IT Index which gained an impressive 44%, only slightly under-performing the Sensex, which rose by 49% during the quarter.

Grim forecast

•Analysts expect companies to meet their guidance and expect a flat to 2-3% decline in revenues in dollar terms

•According to market analysts, pricing pressures are likely to continue to have an inverse impact though not at the same levels

•During the quarter, the rupee appreciated by 2.2% as against the greenback, on the quarterly average rate