Hughes Software has staged recoveries after initial losses for the third day in a row on Thursday.
Volumes, too, have been relatively substantial over the past two sessions and continued today - at 13.3 lakh shares in barely one hour's trading.
Hughes Software Systems shares rose by 1.1% to Rs 179.70 on BSE in early trades on Thursday. The scrip had touched the day's low of Rs 173.60 earlier.
The stock has been witnessing a surge in trading volumes on and off over the past. But in recent times, volumes have ebbed. But, on Wednesday, the scrip clocked a volume of 2.9 million shares on BSE. This was a repeat of the volumes of 2.83 million shares on the preceding day.
Daily volumes have ranged from 500,000-600,000 shares a day to a high of 2.2-2.3 million shares a day. The last time the scrip had clocked stiff volumes was on 10 January 2003 (3.48 million) shares.
The scrip's momentum has been either ways in the recent past. It staged a recovery from its late January 2003 low of Rs 132.35 (of 27 January 2003). But has been oscillating ever since.
HSS is a telecom software company. Late February 2003, it entered into a $ 30-million outsourcing deal with Lucent Technologies. HSS will develop software for Lucent's wireless products. 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.
The project will involve HSS getting an interface with telecom service providers in Europe and China which use Lucent's GSM technology. The software component of Lucent's GSM network will be maintained and enhanced by HSS, going forward. This will involve HSS working with customers like T-Mobile in Germany, China Unicom and Saudi Telecom, among others. Hughes Software Systems will also set up development facilities in Nuremberg, Germany, and expand its operations in Bangalore as a part of this deal.
For the third quarter ended 31 December 2002, HSS registered a 21.3% fall in net profit to Rs 11.40 crore. Total income declined by 6.2% to Rs 59 crore. At the time of announcing Q3 results, Hughes Software's management said the company's sales may record a 10% sequential growth in Q4 ending 31 March 2003 from Q3 ended December 2002, but the next four quarters will continue to be difficult for the telecom sector.
In order to de-risk its business and create added opportunities, HSS has decided to enter into the business process outsourcing segment. This will be started as an independent operation. HSS is also diversifying its revenue streams and is working currently for a foray into the banking, financial services, insurance segment.
HSS 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. 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. The current promoter holding in Hughes Software is 55.57%, the same as on 30 September 2002.
On 29 October 2001, General Motors entered into an agreement to sell HE to EchoStar Communications Corp for $25.8 billion in cash and shares. General Motors and HE together with EchoStar Communications signed definitive agreements that provide for the spin-off of HE from GM and the merger of HE with EchoStar. However, the EchoStar bid has failed and Hughes Software's parent continues to be HNS. The management clarified that the failure of the bid may not affect the company adversely in the future.
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