Thursday, 18 December 2008

Satyam – too late to kiss and make up?

(By Anthony Miller) The bizarre attempt by Indian SI Satyam’s founding chairman to apparently rescue his family’s property and infrastructure companies by merging them into the offshore IT services business almost defies comment. According to the company, the deal aimed to diversify Satyam away from IT services and so de-risk the business. It appears the company did not consult investors prior to Tuesday’s announcement and, not surprisingly, they voted with their portfolios, sending Satyam’s stock crashing 50%. Now the company has ditched the deal and wants to kiss and make up with investors using share buybacks and higher dividends. I didn’t see any mention of changing management, surely the only appropriate action under these circumstances.

5 comments:

Looking out for something new said...

While the investors did use their rights, Satyam also did a great thing of reversing its decision. For all you know, the management could have decided to dig their heels in for a fight. But the Satyam management chose to listen to the investors, give them due respects and roll back their decision. Any management that does so should be given due credit for this which it seems is beign missed out by the media.

life teaches said...

one needs to seriously look at the history before we jump to conclusions. here is a company which has sweated it out for two deacdes to earn the respect of shareholders, customers and the society alike (EMRI programme in India).

I personally do not think there was anything wrong with
"de-risking' model per say.

life teaches said...

I am not sure if Satyam would have risked the de-rsiking strategy without giving it serious thought. Raju has been runnnig the business for more than two decades and he has nothing to hide or prove to anybody.
more than anything it proves that media has again played the TRP card to bail themselves out.

Mitchell said...

The sudden stock crash reflects investors' knee jerk reaction. This was even after the deal was called off. So far as Satyam's filings on SEC are concerned they show a healthy cash balance. I think its just a matter of few days before the stock makes a comeback.

livenewss said...

“Satyam value today $330m against $7bn six months ago accd to Financial Times.”

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