Shares of Indian software company Wipro have taken a beating in the last six weeks, losing half their value since mid-February and leaving financial analysts cautious about the company's near-term prospects.

In addition, news that Wipro's largest customer, Nortel Networks, lowered its earnings estimates for a second time in two months on Thursday continued to drive Wipro's stock lower in recent New York trading.

Despite this, Wipro's executives believe the company is relatively immune to the economic slowdown that has afflicted the US and appears to be infecting countries around the world.

"What we're seeing is a continued robust outlook," says Vivek Paul, Wipro vice chairman, who oversees the company's technology efforts.

"However, in the short term, companies are unsure of how to come to grips with this sudden and swift change in market sentiment and economic growth. So there's a freeze [on IT spending]."

In the face of a slowdown in the economy, US businesses have reined in expenses related to upgrading computers and software -- costs, management believes, that are optional and unnecessary in the face of declining profits.

It is that phenomenon that has led UBS Warburg to lower its 12-month price target on Wipro's stock to 2,000 rupees (about �30).

The brokerage firm has maintained its "hold" recommendation on the stock.

Looking west

Wipro, headquartered in Bangalore, relies heavily on the US for the bulk of its business, with 64% of its revenues coming from the States. The remainder is generated in Japan and Europe.

The company also derives 30% of its revenue from hard hit telecommunications sector, for which it develops software and chip designs.

In a recent research report, Merrill Lynch concluded that Wipro would be more affected than other Indian IT companies by the recent rout in telecom stocks.

Merrill Lynch noted that Nortel, the world's largest telecom-equipment supplier, was Wipro's largest customer in the last three months of 2000.

"There will definitely be an impact on Nortel's Indian vendors, and this will be reflected in the [July through September] quarter earnings," says Priya Rohira, software analyst at Pranav Securities.

"But some of the impact will be cushioned by a shift to offshore projects," she says.

Wipro's Paul admits that "the frothy days are gone." But he says the fundamentals remain.

"Once we get past this gridlock phase, customers will want more, will want more from offshore and will want it from brand leaders such as Wipro."

Dot.com fallout

One reason Mr Paul cites for his confidence is his company's limited exposure to dot.coms, those internet business that of late have taken to pulling up roots and shutting up shop.

That is the reason, Mr Paul says, that fellow IT companies such as Oracle and Sun Microsystems have been hit especially hard.

"They served those businesses."

"Whereas with Wipro, dot.com revenues were never more than 7% of our business -- last quarter they were under 2%," he told the BBC, adding that Wipro never saw a reason to get involved in the explosion of dot.com businesses.

"We never saw a real upside in terms of the airy-fairy business plans that we saw floating around," Mr Paul says. "As a result we don't see a downside."

Nevertheless, Wipro has to work through the short-term freeze on IT spending that enterprise after enterprise has adopted during the swiftest downturn in the economy that most people have ever seen.

That along with the recent tumble in its stock price are what have investors and analysts cautious about Wipro's prospects.