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By Erik Kobayashi-Solomon | 02-17-2010 01:44 PM

Wipro: A Good Company at the Wrong Price

This IT outsourcer just can't grow as fast as the market thinks that it's going to, says analyst Swami Shanmugasundaram.

Erik Kobayashi-Solomon: Hi, I'm Erik Kobayashi-Solomon, one of the co-editors of Morningstar OptionInvestor, and today it's my great pleasure to welcome Swami Shanmugasundaram, who is an analyst for business services at Morningstar. Thanks for coming, Swami.

Swami Shanmugasundaram: Thanks, glad to be here..

Kobayashi-Solomon: Now, back in December, I wrote an article talking about how to make a bearish bet on Wipro, the Indian outsourcer, and as soon as I wrote this, somebody writes in to me and says, "Wait a second. I thought Morningstar thought Wipro is a good company."

So, I know that you like Wipro. I just want to understand better why you think it's a good company. What is it about it?

Shanmugasundaram: See, if you look at any IT outsourcer, it's primarily driven by the management and the processes. So if I look at the top-tier companies--which includes Wipro, Infosys, and Cognizant--all of them have a very strong management. Most of the time they are able to stay ahead of the curve, in terms of when you compare them with their competitors.

So I would say that's what differentiates, because at the end of the day it's a services business. So it's driven by the people.

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