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MindTree to rejig wireless biz on cost overrun

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CIOL Bureau
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MUMBAI, INDIA: Mid-sized IT services firm MindTree Ltd, which announced its quarterly financial results on Tuesday, is winding down its handets and 4G intellectual property business (IPR), its chief executive officer said on Tuesday, citing higher-than-expected capital expenditure.

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The company had made an investment of $4.5 million into the business over the first two quarters of the fiscal.

"We had good traction in the market, but we realised this is a business that requires substantial capital infusion," Krishnakumar Natarajan said.

Mindtree plans to convert the handset and 4G long-term evolution IPR business into providing research and development services to network infrastructure and handset firms.

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The transition would be completed by the end of the third quarter, Natarajan said.

It had acquired Kyocera's India R&D centre in October 2009 to work on IPR in the 4G wireless long-term evolution wireless infrastructure as well as a 3G smartphone.

MindTree had planned the launch of a 3G smartphone based on Google Inc's Android platform in the United States in the second half of the current financial year.

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The IT, knowledge and R&D services company earlier posted a consolidated net profit of 232.4 million rupees on revenue of 3.84 billion rupees.

A Reuters poll of brokerages had forecast MindTree to earn 276.8 million rupees on a total income of 3.75 billion rupees.

Profit fell due to investments in the products business and wage hikes in April and July, Natarajan said. MindTree, which was founded in 1999, saw EBITDA margins drop to 11.7 per cent from 20.9 percent in the year-ago period.

Natarajan however expects margins to improve on a sequential basis.

MindTree's shares, which have shed 16.4 percent in the last six months, closed up 4 percent at 534.45 rupees, while the larger market closed down 0.92 per cent.

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