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Infosys Misses Estimates, Ola Rumored to be Raising $2bn, Social Media Giants to Push Back Against Govt’s New IT Regulations et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Jan 11, 2019 2:33 PM 4 min read
Editorial

Infosys misses estimates, announces returning meaningful cash back to shareholders. Ola rumored to be raising $2bn at a valuation of $6bn. Social media giants to push back against govt’s new IT regulations. Fed reiterates a somewhat dovish stance on interest rates.

 

Now to Today's Top Business News Stories in Our End Of Day Wrap Up:

Infosys Misses Estimates, Ola Rumored to be Raising $2bn,  Social Media Giants to Push Back Against Govt’s New IT Regulations et al.

SOCIALMEDIA

Social media giants to push back against govt’s new IT regulations which would require them to excessively regulate content.

The What: As per a Business Standard report, IT giants such as Facebook and Twitter are preparing to push back against amendments to the IT Act which would seek to regulate the social media giants, curb the spread of fake news, child pornography and more.

Up Close: Proposed changes to include imposition of steeper penalties. Non-compliance with the guidelines may also result in the shutdown of a website.

That aside: In light of the upcoming General Elections, Katie Harbath, Facebook’s Global Politics and Government Outreach Director said that Indian polls remain “top priority” in Facebook’s election integrity plans”.

Facebook’s upcoming plan for India includes:

  • Appointment of a key personnel
  • Increasing advertising transparency
  • Implementation of its learnings from the recently concluded elections in Brazil, the United States, Bangladesh, and India (state elections)

Read excerpts from her interview with The Economic Times here.

 

MACRO

Fed reiterates a somewhat dovish stance on interest rates.

Wait and Watch: As per a WSJ article, Federal Reserve Chairman Jerome Powell affirmed that the Central Bank would be patient in raising interest rates this year on back of rising concerns of global slowdown which has hit the financial markets in the recent weeks.

‘Very worried’: Jerome Powell also expressed his concerns about the rising amount of US debt. Total US debt is about $21.9t, of which $16t is owed by the public. The sustained annual US deficit is now believed to be more than $1t.

Zoom Out: Moreover, with the continued rate increase by the Fed last year, it is likely that the interest on debt would be aggravated.

Against these developments, here’s an interesting take on how US could be a good international hedge in light of an impending global meltdown.

 

TECH

The ongoing govt shutdown has rather severe implications on the US national and cyber security.

The What: Three weeks into the govt shutdown, while most of the core departments such as State, Treasury, Justice and Defense are operational, some crucial departments like Homeland Security, which takes the bulk of the government’s cybersecurity responsibilities, are suffering the most.

Also, this: The Securities and Exchange Commission has also been with only 285 of its employees operating since December 27. This is likely to impact small businesses, particularly those in need of an infusion of capital to continue operating.

The Cool (and not so Cool) Stuff: Click here for a sneak peek into the annual Consumer Electrics Show.

 

STARTUPS

Ola rumored to be raising $2bn at a valuation of $6bn. Bangalore-based co-living space provider Grexter secures $1.5m funding from Venture Catalysts.
 
The What: As per a YourStory exclusive report, Ola is set to raise $2bn in funding at a valuation of $6bn from existing and new investors.
 

Zoom Out: The development comes a day after Ola raised $74m from existing investor Steadview Capital, making it the second-highest-valued startup in India, after Paytm.
 

The Plan: The proceeds will be deployed towards pushing its presence in the Electric Vehicle segment, expanding Foodpanda, and growing focus on international markets.
 

Grexter: As per a VCCircle report, Bangalore-based rental accommodation space provider Grexter has raised $1.5m in its pre-Series A funding round from incubation platform Venture Catalysts.
 

What’s Grexter: It is a rental accommodation platform aimed at students and young professionals. Grexter will use the funds towards expanding the number of rooms and beds it offers at a pan-India level as well as towards ramping up its tech backbone.

Infosys Misses Estimates, Ola Rumored to be Raising $2bn,  Social Media Giants to Push Back Against Govt’s New IT Regulations et al.

 

MARKETS

Infosys misses estimates, announces returning meaningful cash back to shareholders; Q3 Earnings influenced by several macro themes.

The What:  Infosys announced results for the quarter ending December 31, 2018 after market close today. While, the numbers were generally behind estimates, a meaningful share buyback worth INR 8,260 crore and a INR 2,107 special dividend are perhaps key positives in otherwise a somewhat choppy quarter. An upward revision to revenue guidance (constant currency) to 8.5%-9% was also a positive but a sharp decline in profitability perhaps overshadows some of the positives and ends up painting an overall disappointing picture. Earnings Press Release here.

Perspective: TCS had reported yesterday with relatively more robust quarterly numbers. Here's a nice summary which captures the results and succinct views from several brokers. As such TCS and Infosys results are closely watched by investors for readthrough's to the overall Indian IT Services industry notwithstanding impact from fx swings.

Also this: With Q3 earnings season at play, in addition to typical business operational efficiencies, there are several macro-level moving pieces at play which could possibly sway the earnings print (and the stock). Here’s a nice piece touching on some of those moving pieces.

 

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