Mahindra Satyam (SAY)

It appears that the fraud is more widespread --to the tune of $2.56bn. I cannot trust any of their numbers now; therefore I have no idea what this company is really worth. Chances are it is worth much less than they want us to believe.

Basic Valuation Play

This company has lost all credibility withIn the IT world..... NEW DELHI — Satyam Computer Services, a leading Indian outsourcing company that serves more than a third of the Fortune 500 companies, significantly inflated its earnings and assets for years, the chairman and co-founder said Wednesday, roiling Indian stock markets and throwing the industry into turmoil.
The chairman, Ramalinga Raju, resigned after revealing that he had systematically falsified accounts as the company expanded from a handful of employees into a back-office giant with a work force of 53,000 and operations in 66 countries.
Mr. Raju said Wednesday that 50.4 billion rupees, or $1.04 billion, of the 53.6 billion rupees in cash and bank loans the company listed as assets for its second quarter, which ended in September, were nonexistent.
Revenue for the quarter was 20 percent lower than the 27 billion rupees reported, and the company’s operating margin was a fraction of what it declared, he said Wednesday in a letter to directors that was distributed by the Bombay Stock Exchange.
Satyam serves as the back office for some of the largest banks, manufacturers, health care and media companies in the world, handling everything from computer systems to customer service. Clients have included General Electric, General Motors, Nestlé and the United States government. In some cases, Satyam is even responsible for clients’ finances and accounting.
The revelations could cause a major shake-up in India’s enormous outsourcing industry, analysts said, and may force many large companies to investigate and perhaps revamp their back offices.
“This development is going to have a major impact on Satyam’s business with its clients,” said analysts with Religare Hichens Harrison on Wednesday. In the short term “we will see lot of Satyam’s clients migrating to competition like Infosys, TCS and Wipro,” they said. Satyam is the fourth-largest outsourcing firm after the three named.
In the four-and-a-half page letter distributed by the Bombay stock exchange, Mr. Raju described a small discrepancy that grew beyond his control. “What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew,” he wrote. “It was like riding a tiger, not knowing how to get off without being eaten.”
Mr. Raju said he had tried and failed to bridge the gap, including an effort in December to buy two construction firms in which the company’s founders held stakes. Speaking of a “deep regret” and a “tremendous burden,” Mr. Raju said that neither he nor the co-founder and managing director, B. Rama Raju, had “taken one rupee/dollar from the company.” He said the board had no knowledge of the situation, nor did his or the managing director’s families.
The size and scope of the fraud raises questions about regulatory oversight in India and beyond. In addition to India, Satyam has been listed on the New York Stock Exchange since 2001, and on Euronext since January of 2008. The company has been audited by PricewaterhouseCoopers since its listing on the New York Stock exchange.
Satyam has been under close scrutiny in recent months, after an October report that the company had been banned from World Bank contracts for installing spy software on some World Bank computers. Satyam denied the accusation but in December, the World Bank confirmed without elaboration on the cause that Satyam had been banned. Also in December, Satyam’s investors revolted after the company proposed buying two firms with ties to Mr. Raju’s sons.
On Dec. 30, analysts with Forrester Research warned that corporations that rely on Satyam might ultimately need to stop doing business with the company. “Firms should take the initial steps of reviewing the exit clauses in their current Satyam contracts,” in case management or direction of the company changed, Forrester said.
The scandal raised questions over accounting standards in India as a whole, as observers asked whether similar problems might lie buried elsewhere. The risk premium for Indian companies will rise in investors’ eyes, said Nilesh Jasani, India strategist at Credit Suisse.
R. K. Gupta, managing director at Taurus Asset Management in New Delhi, told Reuters: “If a company’s chairman himself says they built fictitious assets, who do you believe here?” The fraud has “put a question mark on the entire corporate governance system in India,” he said.
News of the scandal — quickly compared with the collapse of Enron — sent jitters through the Indian stock market, and the benchmark Sensex index fell more than 5 percent. Shares in Satyam fell more than 70 percent.
Just a few months ago, Mr. Raju was trying to persuade investors that the company was sound. In October, he surprised analysts with better-than-expected results, saying he was “pleased” that the company had “achieved this in a challenging global macroeconomic environment, and amidst the volatile currency scenario that became reality.”
But by late December, it seems he had little support from the board or investors, and four of the company’s directors resigned in recent weeks. Satyam recently retained Merrill Lynch for strategic advice, a move that is generally a precursor to a sale.
Mr. Raju said in his statement that he “sincerely apologized” to shareholders and employees and asked them to stand by the company. “I am now prepared to subject myself to the laws of the land and face consequences thereof,” he said.
Here's a couple footnotes that any (fool) should read before considering this company as an Investment other than SHORT....... "When compared to their beliefs two years ago, 58% of companies said they were less of a believer in the idea that working with Indian IT outsourcers delivers value for their company and its shareholders." InformationWeek January 2009 .......... Half of the IT pros...surveyed say they have new concerns about Indian IT providers..." InformationWeek January 2009 ........... "Sixty-eight percent of IT pros who've worked with Indian outsourcers say they wouldn't work with Satyam based on what they know of the financial scandal..." InformationWeek January 2009 ....... TS

Readjustment after last year's scandal will put this stock back on firm footing

slw hl

This is my first post. I have been following SAY since March 2009.

Do a "google" on the company and you will find that they plan on releasing no further figures until June 30th, 2010 even though their website promises figures by the end of the year.

Also, they are being sued by UPAID (a British company for 1.5 billion dollars). Satyam claims that they will try to settle out of court.
They are also being sued in the US in 12 different class action suits all to do with investors lost revenue due to their scandal earlier in 2009.

Once figures come out in June a merger has been promised by the company that owns 1/3 of the company. It was first reported that the company paid 1 billion for 1/3 of the shares and later it came out that it was only 500 million.Which figure is correct ? Is the company worth 1.5 billion oe 3 billion ? I have seen both figures in different news reports. That's a big difference. Does anyone out there know for sure ? Please report the figure if you know.

In addition to all this they are changing direction as to what their services will be.

Do the research before investing.

If the company is supposedly worth even around 3 billion and they settle all their law suits out of court , investors will wake up some day in the near future and could see that the stock has fallen easily over 50 percent overnight.

At least wait until they come out with some further figures, that's what all the other companies are expected to do through the SEC.
Why should this company be any different ?

This is not the time to be late in filing with the SEC given their recent past record.

Perhaps there will be a short term gain because people are using old figures that look good.
The figures that you see are from June 2009.!!!
If they were real and up to date I would invest heavily in this company but they are NOT.

I will follow this company and perhaps jump in when the dust has cleared , but the company itself is throwing a lot of dust around and is keeping it that way. BEWARE of this company from now through June 30th, 2010 (which is the next time they will throw up some figues). That is their deadline from the SEC and their own internal legal staff. If they miss this deadline they will be delisted by the SEC. Hopefully they won't wait that long.

Once they are back on track in June 2010 my guess would be that they will grow from there and probably do well.

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up is the only way to go

Filed a 6K with the SEC in October, stating they would be late filing their MARCH 2009 FYE. Sounds bad.

You have to be dumb to pick against this bad boy

Stock screener. Looks like they have a decent upside and good cash position.

Hammered by a scandal. Seems solid. Several people note that it is well listed on anticitrade. What the heck. I am adding out of favor, speculative stocks to my list this weekend. I anticipate buying some in the next week or two.

Screen: 50% under 52 week high; 50% over 52 week low; 4-5 stars plus I like the reasoning expressed in recommendations below.

Currently number 4 on Anticitrade. I am a big fan of his blog, and has a solid record on CAPS, so I am willing to give his program a try.

cheap labor and crystal accouting standards will power this stock higher. This latest BOD member will only enforce better governance and overall performance

Passes AAII Graham Enterprising screen

Uncertainty about the books, once that is removed in 60-90 days stock soars

following anticitrade.com

strong financials and way undervalued

Today was the day that NASA shot a rocket into the moon. SAY is basically the stock version of that rocket. This one is going to the moon.