Reflections on the week ending April 16, 2010

Earlier in the week, Infosys Technologies Limited reported its results for its 4th quarter ending March 31, 2010. Quarter over quarter revenue and earnings per share growth were 3.5% (14% annualized) and 2.5% (10% annualized), respectively.  For the new fiscal year, management’s outlook is for revenue growth of 9 – 11% after accounting for expected rupee appreciation.  On the same day, it was reported that Microsoft had outsourced its internal IT services to Infosys.  I see these results/announcements as indications of:
•    a recovering economy and increasing business confidence;
•    the continued trend towards offshore outsourcing; and
•    Infosys’ relative strength within the industry.
On April 16, TD Bank Financial Group announced that it had acquired certain assets of 3 Floridian banks from the FDIC.  This transaction is indicative of TD’s commitment to its US growth strategy.  Through this transaction, TD has not only accelerated its growth in the Florida market but, by acquiring from the FDIC, TD also gets partial protection against losses incurred on the acquired assets.  In my opinion, this transaction is also indicative of TD’s confidence in:
•    The state of the economy;
•    The capability of its US banking platform.
Finally, the week ended with the SEC charging Goldman Sachs with fraud.  While there are many different points of view on these charges, one of the issues that keeps on coming out is whether or not investors knew (Goldman fully disclosed) what it was investors were buying.  We, at Portland Investment Counsel, have consistently encouraged investors to ensure that they know and understand the assets/companies in which they are invested.