MUMBAI: Infosys Technologies Ltd. is seen posting a marginal 0.5 per cent decline in second quarter earnings and a 2.2 per cent increase in revenue over the preceding three months as per US GAAP accounting, Goldman Sachs said in a preview research note on Monday.

The Bangalore-based Nasdaq-listed Infosys, which is India's second largest software services exporter, reports its July-September numbers on Wednesday.

"We expect a 2.2 per cent sequential uptick in revenues to $133.4 million and a slight earnings decline of 0.5 per cent to $39 million," the note by analysts Anil Tewari and Rajeev Gupta said. It said Infosys could see a 3-5 per cent billing rate cut in the quarter and new client additions would be muted given the September 11 attacks on the United States that is its main market.

"We estimate that if pricing falls by about four per cent, volumes would need to rise by about seven per cent to achieve our revenue estimates for the quarter," the note said. Infosys' offshore billing rates had fallen six per cent in the quarter ended June and volumes had risen by over 10 per cent, it said.

Goldman estimated Infosys' operating margins to be down to 30.2 per cent in the September quarter from 32.5 per cent in the quarter ended June. But Infosys' deferral of new recruits and salary increases, and tighter control on general expenses would help offset the impact a little, it said.

Goldman also said the company's employee utilization rate would have fallen slightly from the 69.5 per cent in the June quarter, affected by the loss of productivity in September, increased travel restrictions and business delay. Infosys, however, said it has not changed its estimates for the second quarter or the whole year despite the US attacks. It has forecast a 30 per cent revenue growth for the year ending March 2002 and a revenue of Rs 6.25 billion-6.4 billion ($130 million-$133 million) for the second quarter.

"We believe the official impact assessment from the events in September is not likely to materially impact guidance for this fiscal year, but could impact FY2003's tone," Goldman said. Infosys' shares were down 2.72 per cent at Rs 2,420 at the Bombay Stock Exchange in early afternoon trade while the benchmark exchange index was down 1.59 per cent.

(C) Reuters Limited 2001.