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Digital Q2 net profit slips 4%; revenue up 17%

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BANGALORE, Oct. 29

DIGITAL GlobalSoft Ltd, the Indian software development unit of Hewlett-Packard Co, reported its second quarter (July-September) net profit for the current financial year slid 4.1 per cent year-on-year to Rs 21.37 crore from Rs 22.29 crore.

However, total revenue jumped by 17.1 per cent to Rs 97.91 crore in the July-September period from Rs 83.58 crore a year ago. Shares of Digital sank by 9.7 per cent tracking lower-than-expected results.

Costs increased to Rs 68.77 crore, up 23.2 per cent as the company added 160 employees in the September quarter in line with increased project starts, the company said in a statement. The company, which added 28 new clients in the last quarter, said that its investment in enhancing infrastructure led to a hike in administrative and overheads expenses.

However, Digital maintained that the next two quarters of the current fiscal would better first half's performance and it was committed to better industry growth rates.

Meanwhile, software sales at Digital GlobalSoft rose merely 17.5 per cent to Rs 94.87 crore against market expectation of 25 per cent on year-on-year basis. However, it dipped by 1.3 per cent sequentially.

Digital GlobalSoft was a unit of Compaq Computers prior to its merger with Hewlett-Packard. According to the Digital statement, the integration of the two companies led to "a brief slowdown in parent-led business during the quarter that led to delays in signing of new contracts and renewals of existing ones".

``The business environment is becoming increasingly encouraging,'' Mr Som Mittal, Chief Executive at Digital GlobalSoft, said in the statement. ``We are witnessing greater client commitment and the engagements are getting larger,'' he added.

Increased client engagement, encouraging order flow, strengthened parent commitment, additions to human resources and sustained infrastructure investment would help the company perform better, the statement said.

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