Computer Sciences Corporation (CSC), Accenture Plc (ACN) & Wipro Limited (WIT): IT Companies Shifting Focus To Next-Generation Technologies

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Expecting growth from next generation technology

Wipro Limited (NYSE:WIT) completed the demerger of its non-IT business in consumer care and lighting, infrastructure engineering, and medical diagnostic products and services, on March 31, 2013. These units contributed nearly 14% of Wipro’s revenue, and only 6% in operating profit of last fiscal year. The assets and liabilities of the demerger undertaking were transferred to Wipro Enterprises Limited at book value. With its new exclusive focus on IT, Wipro Limited (NYSE:WIT) expects to enhance its customer base, and does not anticipate that the demerger will affect its future growth. It has projected revenue of $1.61 billion from its global IT service for the first-quarter of 2014, up from $1.58 billion quarter-over-quarter. Wipro, with net cash of around $1.64 billion in 2013, plans to enhance its foothold in next-generation technology, and is continuously looking for partnerships with next-generation service providing companies. In May, it spent $30 million to acquire a minority stake of nearly 10% in Opera Solutions, a New Jersey-based big data company that provides mostly cloud-based analytical services to various industries.

It also acquired a minority stake of around 10% in Axeda, the U.S. based cloud-computing firm, for $5 million. Axeda’s core strength is in its cloud and machine to machine, or M2M, solutions. Partnering with Axeda benefits Wipro Limited (NYSE:WIT) by providing faster M2M applications to customers and enhances its big data capabilities to generate better business solutions.

The global big data market was worth $6.3 billion in 2012 and is expected to reach $48.3 billion by 2018. The U.S. will lead in the global big data market by 2018, capturing around 54.5% of its market share. Wipro Limited (NYSE:WIT) expects to be a leading player in that market, projecting revenue of $7.07 billion in fiscal year 2014 compared to $6.54 billion in 2013, recent acquisitions withstanding.

Conclusion

By divesting its non-core low-margin businesses, and investing in next-generation technologies integral to its cost cutting plans, Computer Sciences Corporation (NYSE:CSC) will strengthen its overall margins. Accenture Plc (NYSE:ACN), with its growing order book and improving cloud-computing capabilities, seems to be a good pick. Wipro Limited (NYSE:WIT)’s demerger of its non-IT business allows it to focus on its core business, and its acquisitions in next-generation technology companies will likely result in long-term future growth.

All of these stocks are a “buy” in the long-term.

Madhu Dube has no position in any stocks mentioned. The Motley Fool recommends Accenture Plc (NYSE:ACN).

The article IT Companies Shifting Focus To Next-Generation Technologies originally appeared on Fool.com.

Madhu is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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