Quarterly net profit of HCL Infosystems plunged 74 percent as its flagship computer retailing business suffered in an economic slowdown worsened by lesser government investment in computing and office automation business.
The company earned 121.5 million rupees for July-September, compared with 474.6 million rupees a year ago. Net sales dropped 6 percent to 27.88 billion rupees.
Their partnership with Nokia hurt. Nokia has not been doing well, and that pressured HCL's margins. This impacts their distribution business, said a Mumbai-based sector analyst.
HCL Info has earlier this year renewed an agreement with Nokia to distribute the Finnish firm's devices. That partnership is due for renewal on Dec. 31, 2014. A flood of cheap handsets from the likes of China's ZTE and Micromax is destroying Nokia's top position in emerging markets, and as Asian handset manufacturers increasingly move to Google's free Android software.
The desktop market is also very slow. This used to be their bread and butter segment, said the analyst, who declined to be identified.
HCL has a less than 10 percent market share in personal computers. Dell, Acer and Hewlett-Packard lead the Indian market, according to a report by researcher Gartner in August. HCL Info posted a loss of 6.8 million rupees for its computer systems and services segment, compared with a profit of 358.2 million rupees a year earlier.
Overall System Integration business continued to be severely impacted by slowdown in projects and customer decision cycles, Chief Executive Harsh Chitale said in a statement.
Profit from the company's telecommunications and office automation business also fell 16 percent before tax to 452.5 rupees. HCL Info shares, valued at about $300 million, were down about 3 percent at 63.40 rupees at 1.25 pm.