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Satyam's latest updates - May Axe 10,000 Employees: Headhunters

Started by VelMurugan, Dec 24, 2008, 02:27 AM

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Dec 24, 2008, 02:27 AM Last Edit: May 06, 2009, 11:28 PM by The_Big_S
Satyam chief Ramalinga Raju resigns?

Early on Tuesday, there were unconfirmed reports that Satyam Computers founder and chairman Ramalinga Raju had resigned from the board.

The reports also suggested that Raju had put in his papers and that he was awaiting the company board's decision on the issue. When contacted, a Satyam spokesperson said, "We are still awaiting news from the management. We will let you know once there is an announcement to make."

Incidentally, a Satyam board meeting is scheduled for December 29. According to analysts, Raju's resignation wouldn't make much of a difference to investors. "He is not to be blamed alone...the responsibility lies with the entire board. It was a unanimous decision and this board is in no place to decide on the issue," said Prabhudas Leeladhar analyst Apurva Shah.

The resignation of the chairman, who is also the promoter of the company, could raise issues of succession, which is far greater than him quitting, Shah added.

Shares of Satyam were down 8.5 per cent to Rs 148.60 on the BSE in intra day trading. The company's shares have seen severe beating ever since the company board pushed through a decision to buy out two subsidiaries belonging to the promoters' family.

The Satyam board had to later reverse this decision following strong opposition from investors and shareholders.

Source : indiatimes


Will Raju continue to hold fort?

HYDERABAD: Will B. Ramalinga Raju continue to hold the fort in the country's fourth largest IT services company, Satyam Computer Service? This is a "billion dollar" question lurking in the minds of shareholders and also market watchers.

The company's share leapt on Monday on the Bombay Stock Exchange to close at Rs. 148.25, touching an intraday peak of Rs. 159.60 after opening at Rs. 133. The upside continued till 2.50 p.m. and the scrip dipped after the news of resignation of independent directors trickled in.

With the promoters' group pledging 8.27 per cent (the complete stake of the family-owned SRSR Holding), the remainder with them is just 0.34 per cent. It is not clear how many of the shares pledged with the institutional lenders, including IL&FS, GE Capital and DSP Merrill Lynch, were liquidated to cover the margin shortfall.

Sources say that IL&FS alone sold 60 lakh shares, which accounted for close to one per cent of the total number of shares in the company. Institutional investors are said to be insisting on change in management. Aberdeen Asset Management Company, one of the largest institutional investors, felt that the company needed to rebuild its credibility.

Unconfirmed reports suggest that multinational giants such as IBM and Accenture and domestic behemoths such as Reliance (ADAG) and Infosys are eying for a "controlling stake" in Satyam. However, it all depends on how much the Rajus still hold in the company and also how much the institutional investors may divest to pave the way for the IT biggies to take the controlling stake.


Satyam Chairman Raju's letter to employees

Dear Associates,

I am writing to inform you of what has developed since my note of December 18th and to outline plans to restore our stakeholders' faith in Satyam.

The events of the past two weeks have raised many questions, but these can be distilled into two basic issues: the viability of our business strategy
to diversify; and the effectiveness of our corporate governance.

Re: Business strategy, you should understand that Satyam is completely committed to the IT services and BPO business, as we have been since our inception. While the idea that we could diversify into an unrelated business
was rejected by our investors, it was formed with the belief that doing so would not imperil our leadership in our core business or lessen our commitment to it, and that all stakeholders would benefit. Satyam did not - and does not now - intend to retreat from IT and BPO services in any way, and going forward, Satyam will focus exclusively on these markets.

Re: Corporate governance, the board arrived at its decision to bid for Maytas by following all required processes and procedures, and while there was a spirited discussion among members, their vote to approve the motion was unanimous. Further, Satyam has won numerous awards for excellence in corporate governance, including the Golden Peacock Global Award for Excellence in Corporate Governance on two separate occasions, most recently in 2008.

Over the past two weeks, we have been communicating these facts to our customers, and I'm very pleased to report that customers continue to show a high level of trust in Satyam.

We have also been in contact with many of our investors, and we have taken key steps to regain their confidence. These include strengthening the board by changing its size and composition, and engaging DSP Merrill Lynch to provide strategic advice and options. The board will meet on January 10, 2009 to consider these options and to chart a course of action that would boost stakeholders' confidence further.

Please be assured that the board and the leadership team are doing everything possible to get Satyam back on track. We cannot do this without your help, however. I ask for your continued faith in Satyam and for your steadfast focus on your customers, especially in the face of wild speculation and unchecked rumor. There is simply no more effective way to strengthen the company and to secure its future - and yours - than by delighting your customers.

Thank you very much for your commitment and support. Once again, I wish you the very best for 2009.

With warm regards,


Source: Economic Times


Jan 05, 2009, 06:10 PM Last Edit: Jan 09, 2009, 12:14 PM by dhilipkumar
Satyam surges five days in a row amid takeover speculations

MUMBAI: Satyam Computers continued to surge for the fifth day in a row gaining over 7 per cent amid speculations that corporate majors, besides private equity firms, are eyeing the company for a possible takeover. At the end of the day's trade shares of Satyam settled with a gain of 7.17 per cent at Rs 182.35 on the Bombay Stock Exchange. During the trade the scrip had rallied to a high of Rs 184, up 8.14 per cent over the previous day's close on the bourses.

On the National Stock Exchange the scrip settled with a gain of 6.38 per cent at Rs 181.70. Over 3.69 lakh changed hands on the bourses. The scrip, which had dipped to its 52-week low level of Rs 114.65 last week, has pulled back amid speculations that the company is becoming a ripe target for takeover as the valuations are turning attractive. In the last five trading session the scrip has advanced over 35 per cent amid rumours that Anil Ambani Group (ADAG), Mahindra British Telecom, L&T Infotech, besides rival IT firms are eying the company.

The scrip of Satyam had taken massive battering in the past two weeks, plunging nearly 40 per cent. However, in the five consecutive trading sessions the scrip recovered over 19 per cent of the losses it suffered since it had announced the deal to buy two infrastructure properties - Maytas Properties and Maytas Infrastructure - for $1.6 billion.


Nasscom no authority to probe Satyam-WB episode, says Mittal

NEW DELHI: Reacting to a request by an IT-BPO union UNITES to conduct inquiry into the Satyam-World Bank fiasco, IT industry body Nasscom on Friday said that it has no authority to look into the matter. "It is a company-level issue and we do not have any authority to conduct an inquiry into the matter," Nasscom President Som Mittal said, adding that he was yet to received a formal request in this regard.

Fearing that the image of the Indian IT firms globally will take a beating following the Satyam fiasco, IT-BPO union UNITES has urged Nasscom to institute an inquiry in association with the World Bank on Satyam,which has been banned from doing business with the bank for eight years. "We want the inquiry to look into the possibility that some vested interests, who want to tarnish the good name and reputation of the Indian IT companies," Prithviraj Lekkad, President, UNITES Professionals India told PTI.

Nasscom and the government would have to decisively intervene and get to the bottom of the World Bank findings on Satyam and clear the fair name of Indian firms, including Satyam, and the integrity of the staff working for them abroad, he added. The Bank had said on December 23said, "Satyam was declared ineligible for contracts for providingimproper benefits to Bank staff and for failing to maintain documentation tosupport fees charges for its sub-contractors. Within two days of the Bank's announcement, Satyam had formally requested the World Bank to immediately withdraw those statements and asked it to "issue a new statement apologising to Satyam for the harm done to the company due to the Bank's actions."


Satyam explores possible merger

MUMBAI: Satyam Computer Services management and some funds have approached two smaller rivals about a merger to fend off any possible hostile bid for India's fourth-biggest software services exporter, according to a newspaper report on Monday, but one of the firms said it was not interested. Citing investment banking sources, the newspaper said Satyam held talks with HCL Technologies, which recently bought British consultancy Axon, and MindTree Ltd about a possible merger. Bangalore-based MindTree said it was not interested. "There's no interest from our side. Let me tell you, there is minus interest from us on this idea," Ashok Soota, executive chairman at MindTree said.

A spokesman for HCL, based in New Delhi, said the report was speculative. Officials at Satyam, which is also listed in New York, could not immediately be reached for comment. Speculation about a bid for, or management changes at, Satyam has been mounting since a botched attempt last month by the firm to buy two infrastructure firms in which its management had stakes.

Satyam reversed the decision after shareholders protested, but its shares have slumped by more than a fifth since then and four independent directors have resigned. The outsourcer said on Friday that the holding of its founders had fallen by a third to 5.13 per cent, and analysts said this made Satyam a more attractive target for private equity or global information technology firms. Satyam has hired the local unit of Merrill Lynch to review ways to enhance shareholder value, and its board is scheduled to meet on Jan 10 to consider options, including a share buyback.

By 0504 GMT, Satyam shares were quoted down 3.3 per cent, while the main Mumbai stock index was up 1.3 per cent.


Tech Mahindra may bid for Satyam

Tech Mahindra may reportedly bid for acquiring Satyam in a cashless merger deal, say reports.

Satyam is going through a worst phase which has resulted in its share value erode rapidly for the past few days. The company came into troubled waters when it emerged that the board had approved a proposal to invest in a real estate firm owned by children of Raju, one of the main promoters of Satyam. Following strong negative response to the move, Satyam had to eventually call off the deal.

Reports say that Tech Mahindra may be interested in acquiring Satyam as part of its strategy to evolve from a telecom industry focused IT firm to a full fledged IT services company spanning across all sectors.

Earlier reports mentioned that HP, IBM, Mindtree would also be interested in acquiring Satyam. Mindtree however issued a statement denying any such move.


Satyam to log in highest Dec growth among peers: Analysts

MUMBAI: Here's more to Satyam Computer Services' appeal as a takeover target: it may be the best performer among India's Top 5 IT firms. According to consensus estimates of six brokerages, Satyam is expected to report the highest growth in rupee revenues for the December quarter among its peer group and its dollar revenues are expected to be only a tad below its guidance.

The embattles software major is likely to announce its quarterly results on January 16 or 20. A few brokerage firms like CLSA expect Satyam to meet its dollar guidance of $634-652 .2 million for the third quarter with revenues of $640 million. While Satyam is expected to maintain its full fiscal revenue guidance, Infosys Technologies is expected to scale down guidance for FY09, according to CLSA.

According to IIFL's Sandeep Muthangi , Satyam, Infosys and Wipro are expected to benefit because of their higher exposure to the dollar, as compared to Tata Consultancy Services (TCS) and HCL Technologies. The rupee's fall against the dollar will have a positive impact , while the pound's fall against the rupee will impact companies like TCS, which have a higher pound exposure. The quarterly numbers, however, will make little difference to Satyam's stock price beacuse of the loss of investors confidence in the management.

While the December quarter is typically weaker because of the more numbers of holidays, the slowdown this year has caused forced shutdowns by clients. According to Mr Muthangi, in many cases there have been demands for nonbilling for the last ten days of December. For instance, Wipro had asked all its offshore employees working for Cisco to apply for leave for five business days. "Our employees' leave/vacation is aligned around their respective customers' leave/vacation window," Wipro's executive vice president, HR, Pratik Kumar told ET in a written response.

"Clients are reluctant to commit on 2009 budgets and discretionary projects have been put on hold... With volume growth slowing down and pricing cut imminent in 2009, IT companies are focused on controlling cost to maintain margins," said Spark Capital analyst Santhanakrishnan.


Satyam staff may buy shares

HYDERABAD: Faced with a potentially uncertain future, some staffers of Satyam Computers are seriously considering whether they should start buying shares of the company in the market. A move to this effect began in the Hyderabad development centres of Satyam on Monday.

"The idea is that we must save the company from a hostile takeover the possibility of which now seems more likely. We should mop up some shares so that we can support the existing management," a senior Satyam staffer told TOI. "Raju and Ramu may have made a poor management decision to buy into Maytas but we should give them the benefit of doubt. After all they founded the company. They would any day be better than any new guy," suggested another Satyam staffer.

But there is a bit of a problem because the company is passing through the quiet period since December 17 that will end on January 19. This is because the third quarter results of Satyam will be announced on January 17 and there is no trading window a month before that to avoid any kind of possible insider trading. During this period senior vice presidents and above cannot deal in the Satyam scrip at all. Other employees are allowed to sell shares worth Rs 5 lakhs or 2500 shares whichever is lower. But this too with pre approval of the secreterial department of the company.

"It is unfortunate that this danger to our company has come during this period. But after the quarterly results we will swing into action," a Satyam employee said. He felt that in the context of India, no possible takeover bid can actually materialise in ten days time. So waiting for 10 days will not lead to any problem. Analysts aver that the move to mobilise the support of the staff is mooted by management itself. The move is in continuance of the offensive launched by the Rajus to woo employees through e-mails, which aimed at motivating the employees and reaffirming the promoters interest keep running the company. A site has also been put up in cyber space that is designed to din support in favour of Rajus.

It is expected that more than the lower rung associates, the very senior executives will be the ones who will buy into Satyam shares in a big way post the quarterly results. "Only they have the financial wherewithal to buy such a number of shares that are significant in number," said an analyst adding that such staffers are most likely to be affected if there is a management change. So there interest in trying to buy Satyam's scrip would also be higher.


Satyam founders' stake falls to 3.6 per cent

BANGALORE: The stake owned by founders of Satyam Computer Services has fallen to 3.6 percent from 5.1 percent after institutional lenders sold the stock, the Indian outsourcing firm said on Tuesday.

Satyam had said earlier the founders' stake might have been diluted as institutional lenders to whom they had pledged their shares exercised options to cover margin calls.

On Friday, Satyam had said the stake owned in India's No. 4 software services exporter by SRSR Holdings, in which the founders had accumulated their shares, had fallen to 5.13 percent from 8.27 percent at the end of the September quarter.

The company has said it will hold a board meeting on Jan. 10 to consider options to improve shareholder value and corporate governance, leading to speculation of a possible stake sale or takeover bid.

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