Views about Satyam

[sandeep.kala]

sensex and nifty comprimises some chosen scripts from BSE and NSE respect...These are generally leaders of their respective sector.....Now satyam no more leader or for that matter faithful script, they have removed from it index i.e sensex and nifty...

Thanks for this information

 

[kkseal]

At 20-22 Rs Satyam's mkt cap will be less than the (gross) bv of its fixed assets.

Even after adjusting for the fraud the company ought to have 300 odd crs in cash/cash equivalents. The balance sheet also shows nearly 500Cr in investments & 766Crs of Loans & Advcs but i'm not taking any of these into acct as all of these figs are now highly suspect.

It has aprox 8400 Cr in revenues (fraud adjusted) & barring a miniscule amt of secured loans the company is debt free.

At least half of the biz has good profits The other half can be brought to at least break even by a good, credible mgmt in 1 yr. The 15-20% bench strength that IT companies generally maintain can be laid-off without much hassle & cost (& those employee figs might also be inflated in the first place).

What will deter an acquirer though is the potential law-suits The cost of litigation can be very high in countries like US where Satyam has both a listed ADR as well as offices & delivery centers. Also the negative outlook for IT in the next 1-2 yrs will make it more difficult to turn around the unprofitable segments of the biz. Had this happened 1-2 yrs earlier Satyam would have been lapped up at current prices.

 

[kkseal]

The fear of hostile takeover (with low promoter holding) is what prompted the fraud in the first place. May have started small (with Raju & Co. probably viewing it as a short term measure) but then the process of propping up revenues & earnings became a vicious cycle & the smudged figures grew bigger & bigger till they finally became unsustainable.

 

[praveen taneja]

Why would you want to buy this company....no money....banned at numerous clients....50000 employees in this type of economy....plus bad rep...

just stay put...this share would be in single digits.....

by the way, this is what I got from another website (reference e- investing dot in):

These were the major players who sold Satyam on NSE:

ABERDEEN ASSET MGRS LTD - ABERDEEN GLOBAL -ASIA PACIFIC FUND,SELL 66 lac shares at 41.82.
ABERDEEN INTERNATIONAL INDIA OPPORTUNIES FUND(MAUR) LTD, SELL 155 lac shares at 41.82.
FIDELITY MANAGEMENT AND RESEARCH COMPANY A/C FIDELITY INVES,SELL 40 lac shares at 108.96.
MORGAN STANLEY MAURITIUS COMPANY LTD. SELL 48 lac shares at 68.68
SWISS FINANCE CORPORATION (MAURITIUS) LIMITED,SELL 60 lac shares at 85.57.

Quite true that FII sold 6 crore share of Satyam yday
But sad when i think who bought them Poor Retailers or the Hopeless Dii,s
Real culprit are the PWC and the taxation department n Chiddu

 

[pons]

No the real culprit are the Auditors and charted accounts, who audit the accounts. what the government will take action against the culprit auditor who is the man to audit the accounts and saying that the accounts are real company does not make any fraud like that.?

And it is still wonder that How any other market pandits and analysists, corporate analysits can not found the fraud which was carried over past seven or eight years????

 

[kkseal]

One thing that puzzles me about Satyam is the very poor operating margins of the company. The fraud-adj OPM is just 3%. How can it be so low when peer group largecaps have margins of 25-30%? (Even the better quality midcaps have margins in the same range). The offshore margins are even better - 40-45% - & half of Satyam's biz also fall under this category.

So has the entire industry been fooling us ? If not this would imply that Satyam's work rates have been far far lower than the industry avg or their costs abnormally high (or a combination of both). If this had been the case then wouldn't industry peers, the competitors got a whiff of it a long time back? (I mean books can be fudged in a close room with a few heads but its next to impossible to fudge/cover operations of a global biz with hawk-eyed competitors watching your every move) Their operational expenses (as a % of sales) don't appear to be terribly higher than its peers (& nowhere has he said he has fudged those). Even assuming there were hidden liabilities most of it would manifest at the NPM & not OPM level.

The only other explanation can be that the inflated cash that Raju has claimed to be non-existent was very much there, very much in existence, but had been diverted elsewhere. The Cash & Bank A/c might have actually been the proxies for a Maytas on the debit side. The Maytas deal might have been an attempt to legitimize the siphoning off of funds, to replace the proxies with the real, but as we know it didn't materialize.

All this is speculation off-course but if this 2nd hypothesis happens to be true (even if not in its entirety) it's good news for the company. As it'd mean there's nothing intrinsically wrong with the business but everything wrong (as wrong can be) with its promoters.

 

[uasish]

My view :=

Either you trade with Fundamental OR thru Technicals.
Fundamentals are highly 'Smoky Unclear'
Technicals on a 87 % down from previous bar (we cant adjust the charts as we do in cased of Split) will always say buy & buy at 50 or 40 or 20 or zero.
So only other option is more similar to what a poker player may do in Gambling.
Hence i am not trading this Stock.

 

[shinchan]

Good analysis KKseal. though I don't want to catch a falling knife.

 

[karvy]

One thing that puzzles me about Satyam is the very poor operating margins of the company. The fraud-adj OPM is just 3%. How can it be so low when peer group largecaps have margins of 25-30%? (Even the better quality midcaps have margins in the same range). The offshore margins are even better - 40-45% - & half of Satyam's biz also fall under this category.

So has the entire industry been fooling us ? If not this would imply that Satyam's work rates have been far far lower than the industry avg or their costs abnormally high (or a combination of both). If this had been the case then wouldn't industry peers, the competitors got a whiff of it a long time back? (I mean books can be fudged in a close room with a few heads but its next to impossible to fudge/cover operations of a global biz with hawk-eyed competitors watching your every move) Their operational expenses (as a % of sales) don't appear to be terribly higher than its peers (& nowhere has he said he has fudged those). Even assuming there were hidden liabilities most of it would manifest at the NPM & not OPM level.

The only other explanation can be that the inflated cash that Raju has claimed to be non-existent was very much there, very much in existence, but had been diverted elsewhere. The Cash & Bank A/c might have actually been the proxies for a Maytas on the debit side. The Maytas deal might have been an attempt to legitimize the siphoning off of funds, to replace the proxies with the real, but as we know it didn't materialize.

All this is speculation off-course but if this 2nd hypothesis happens to be true (even if not in its entirety) it's good news for the company. As it'd mean there's nothing intrinsically wrong with the business but everything wrong (as wrong can be) with its promoters.

If the cash was diverted and investigations confirm the diverting of the funds, the possibility of recovering the funds and ploughing them back into the company does exist . In this case the cash balances of the company will increase.But I seriously do not believe the investigations will ever explore that angle.

 

[kkseal]

When every head in the books is suspect the best way is to look at the operational side of the biz & seek discrepancies there. If fund siphoning did take place it shouldn't be too difficult for investigators dealing with economic crimes to unearth unless off-course the real intentions of the 'investigations' is a cover-up. (Raju does have very influential political links, specially in AP)

I'm surprised they haven't arrested & interrogated the CFO (forgot his name) yet. He's the one in the thick of things & can potentially spill the beans (if granted some kind of amnesty).

I'm also alarmed by the AP govt's lobbying to have three of their nominated members ( politicos/bureaucrats?!) on the (new) Satyam board (for obvious reasons