Pactera regains some momentum
Updated: 2013-11-25 06:24
By CHEN JIA in San Francisco (China Daily USA)
Pactera, the biggest IT vendor in China, reported net revenues recovering slowly during the third quarter, with growth of 7.2 percent year-over-year.
"Our third quarter revenue was in line with our August guidance and closed at $173 million," Helena Chen, interim CFO and senior vice-president of Pactera, said in a conference call on Thursday.
"The top line momentum was continuously impacted by the headwinds from our major telecom customer and Japanese currency depreciation, while the bright side is that we are maintaining strong growth in our domestic BFSI (Banking, Financial Services and Insurance) business," Chen said.
It is the first earnings conference call since the China-headquartered global consulting and technology services provider announced its acquisition by the US private-equity giant Blackstone Group LP for around $600 million this autumn.
Pactera did not disclose any developments relating to the proposed on-going transaction during the call.
"There can be no assurance that this or any other transaction will be approved by the shareholders' meeting or consummated," Tracy Zhou, the head of strategic development and senior vice-president of Pactera, said on Thursday.
In May of 2013, the US consortium initially suggested $7.50 a share for Pactera, but then dropped the offer down to $7 per share four months later.
It was reported Pactera's revenue was influenced by a major telecom customer and some client-specific business challenges. The company was facing a weaker-than-expected full-year revenue and profit outlook.
Despite setbacks, the bid was increased to $7.30 a share after a special committee approved the merger and recommended it for a shareholder vote, according to the Wall Street Journal.
That price represents 39 percent of premium to the company's share price prior to the receipt of the initial buyout proposal, said the report.
With approval from regulators and at least two thirds of the company's investors, members of Pactera's existing management team and GGV Capital were also part of the buyout consortium, it said.
Tiak Koon Loh, the CEO and director of Pactera, said on Thursday that Pactera's "US business is impacted by weaknesses with a number of our top five clients".
"We continue to experience business deterioration with our major telecom customer as the client is still shifting its outsourcing business until the joint venture is formed, and the company is cooperating with this process," he said.
He also noted the company's Japan business declined by 34 percent year-over-year due to the adverse effect of the Japanese yen depreciation.
"Despite the above challenges, we were pleased to see growth in both our domestic and European business," he said.
Pacetera's greater China business increased by 32 percent over the prior year and its
Europe business continued to improve from the last quarter, achieving a 26 percent growth rate year-over-year.
Pacetera's consulting and packaged solution services revenue increased 31 percent in the third quarter of 2013.
"This increase was primarily due to our transformation to more IP and solution-based business," Loh said.
Pactera is the result of a 2012 merger between VanceInfo Technology Inc and HiSoft Technology International Ltd. Both companies were listed on US exchanges and provided IT outsourcing and consulting services in Europe and the United States, as well as in China, Japan and other Asian countries.
Founded in 1995, VanceInfo became the first Chinese company in the software development outsourcing industry to list on Nasdaq, in 2007.
Today, Pactera has become a 20,000 strong company, with dozens of delivery centers around the country and a Fortune 500 client base.