Hughes Software's guidance was not well received by the market and an US-based fund was believed to be going the whole hog selling on the counter.

As a result, the scrip came off its earlier high of Rs 209. By 12:11 IST, the scrip of Hughes Software was trading lower by 3.66% at Rs 190.80. It had also recovered from its low of Rs 159.40. Volumes of over 1.3 million Hughes Software shares were notched up on BSE by that time.

As per market talk, a US-based brokerage has sold around 800,000 Hughes Software shares on behalf of its foreign institutional clients on Tuesday.

Apparently, the future guidance by the company has not been received too well. Analysts feel that the company will somehow have to maintain its decent performance in the last quarter over the next four quarters, to meet its 40-45% earnings growth. And this may not likely be possible with the slump in the telecom sector, the company's main customer . For FY 2003-04, Hughes Software has projected a 40-45% growth in net profit and a 35-40% growth in sales, basing its projections on the boom to be experienced in its new diversifications and an order backlog of $32 million.

After Hughes Software announced a multi-year outsourcing relationship with Lucent Technologies, the world leader in mobile communications, players expected that the earning growth for FY 2003-04 would be higher, but the company disappointed by giving a moderate growth guidance.

Under the scope of the agreement, Lucent Technologies will outsource the software development and maintenance support for selected wireless products, and HSS will set up a state-of-the-art dedicated development facility in Nuremberg, Germany, and expand its existing operations in Bangalore, India. But reports reveal that the company is buying out Lucent Technologies software operations for GSM (a technology used to run cellular phone networks) in Germany and India.

On Monday, Hughes Software announced an 8.7% rise in net profit to Rs 13.8 crore for the fourth quarter ended 31 March 2002 compared to Rs 12.7 crore in the corresponding period last year. Net sales increased by 9.8% to Rs 63.7 crore from Rs 58 crore in MQ 2002.

The results came clear above a capitalmarket.com poll estimate - net profit of Rs 9.9 crore-Rs 12.7 crore and net sales of Rs 60 crore-Rs 63.5 crore.

The company said it added seven new clients including Fiberhome, VI Corp, July Systems and Meru Networks during the quarter under review.

However, for the full year ended 31 March 2003, the company registered a 27.4% drop in net profit to Rs 37.9 crore on a 6% fall in net sales to Rs 220.4 crore (Rs 2.2 billion). The company has declared a 40% dividend for FY 2002-03.

Hughes Software is focused on the telecom sector and derives more than 53% of its revenues from the wireless sector. However, the company is feeling the pinch of the sluggishness in the telecom sector globally.

In order to de-risk its business and create added opportunities, HSSL has decided to enter into the business process outsourcing segment. This will be started as an independent operation. HSSL is also diversifying its revenue streams and is working currently for a foray into the banking, financial services, insurance segment.

Hughes Software is a subsidiary of HNS, formerly a unit of Hughes Electronics Corporation. HNS is a networking company, dedicated to providing products and services to build and operate digital communication networks worldwide. HNS is the world leader in VSAT-based networks for voice and data, cellular wireless telephony, packet switching and multi-protocol routing. HE is a world leader in the design, manufacture and marketing of advanced electronic systems. It was a wholly-owned subsidiary of General Motors Corporation, US. HNS-India Inc. is the principal shareholder in Hughes Software

As on 31 December 2002, promoters held 55.57% stake in HSS, while the public, institutions and foreign bodies held 15.74%, 3.99% and 13.32 %, respectively.