Satyam Computers Ltd: Time to play in the slog overs??!!

Though lot of waters have flown through the corporate rivers, the Satyam Computers' s boat seems to floating steadily even in troubled waters, till now. So what is the secret of this strong rebound in the stock price from its 52-week low of Rs.11.50??!! Let us see if we can find some positive points in its support, in the sea of negatives....

1. Satyam Computers Ltd is mammoth in size among the contemporary IT companies, considering, its 53,000 strong workforce, working with 185 Fortune 500 companies(customers) and operatng in 66 countries. Thus, Satyam Computers, the Hyderabad based IT company which started with 20 people now employs around 53, 000 people across the globe in different locations and has been envy for many in the India and the globe.

2. Earlier there was rumour (or infact a new item appeared in Economic Times, 31st December, edition) that Hewlett-Packard is evaluating the possibility of acquiring a stake in IT Service Provider, Satyam Computer. It was pointed out in the news article that HP executives were busy evaluating the option even during the Christmas-New Year holiday season. So is there any truth in the news article published in one of the noted economic dailies.

3.All is not bleak for investors as even corporates like L&T which acquired 3.95% in Satyam last month have decided to hold on. AM Naik, CMD, L&T said the company won't sell now as the IT major's business has potential. "There is no intention of buying or selling Satyam shares as of now."

4. KC Reddy, Head-Asset Management, Amas Bank, feels the market impact is overestimated in the case of the Satyam scam. "Whatever had to happen has already happened or will get over in the next three days." Reddy believes it is a very attractive business as it has large clients like Chevron and Caterpillar for years. “They have pretty impressive list of clients and the fact is no client has come back and said that you have not delivered.”

5. Rs.7000 Cr is nothing if we consider that Mr.Raju earned thousand of crores through the exercise of put options in the F & O market, after the confession of senior Raju rattled the capital markets, with the stock of Satyam Computers Ltd, nosediving. If that whole amount of around Rs.7000 Cr is paid by the Promoter Brothers, and if there is a "surgery in the staff strength" then we could see the company getting competitive. What I feel is that hell will not fall on Satyam Computers Ltd if it shows loss in its books for 2 or 3 quarters.

ALSO, PLEASE TELL ME HOW DO THE COMPANIES WHO ARE INTO BIFR (Board of Financial Reconstruction) and whose NET WORTH have TURNED NEGATIVE PAY SALARIES TO ITS STAFFS......

HENCE IT IS RIDICULOUS TO SAY THAT SINCE IT HAS LOST Rs.7000 cr DUE TO ACCOUNTS-JUGGLERY, it will not able to pay salaries to its staff...What is the guarantee that employees would not suddenly work extra time and start generating more and more revenues for the company; forgoing their salaries for 2 to 3 quarters!!

6. With the trimming of the staff of the ill fated Satyam Computers Ltd, it could become highly competitive with its quality employees spread across the world. If the highly paid employees decides to not to take salaries for at least 2 (two) quarters then its would have a massive saving on its revenues, as 60% of the expenditure of Satyam Computers Ltd is due to employees' salaries. Also, one will be astonished if they know the amount of salaries the Board members took--now that board has been defunked, this money would be saved.

7. Satyam's interim CEO Ram Mynampati said on Thursday the company has taken care of the salary for December, but its liquidity position was not encouraging. IT-BPO employees union UNITES said, "We are in touch with the senior and top-level management of Satyam, all kind of rumours are doing the rounds but we still do not have any clarity on the isuue." Moreover, this being the election year, even if the company do not have money government might chip in to rescue the employees," UNITES general secretary Karthik Shekhar said.

8. Satyam has edge over its rivals in business software and back-office services for clients and has high profile clients like General Electric and Nestle.

9. Sources close to Raju told DNA that the family has always enjoyed proximity to the powers that be. It was during N Chandrababu Naidu's time that chairman B Ramalinga Raju shot to fame as the poster boy of IT in the state. Obviously, Raju was serving the priorities of the Naidu government - information technology. The change in dispensation after 2004 changed priorities for the Rajus, too. "The Congress government, led by YS Rajasekhara Reddy (YSR), has infrastructure and construction as its priority, and family company Maytas was ready to serve the purpose," a senior politician in the state explained. In the ensuing months after the Telegu Desam Party lost power in Andhra Pradesh in 2004, chairman B Ramalinga Raju shifted his focus to strengthening Maytas --the reverse of Satyam -- which was created from family-owned construction company Satyam Construction. Maytas was converted into a public limited company in December, 2006, almost two years after the YSR government came to power. "Most of us thought that the YSR government would create troubles for Raju since he was seen to be close to Naidu. Surprisingly, Raju managed to remain equally close to YSR," a former Telugu Desam leader said. Sources at YSR's office confirm that the Raju brothers did indeed enjoy a good equation with the chief minister.

"It's a different model of corruption that's suspected to be behind the deals with Maytas or other such companies in the state. There is no cash transaction. But, the contractor gives other tangible returns to the powers that be," a source close to a senior bureaucrat said. According to him, Maytas had agreed to give away about 200 acres of land to an immediate family member of a senior politician in return for some of the contracts it had won. This could not be independently ascertained by DNA. The proximity between the Rajus and the YSR government can also be ascertained by the fact that the 108 emergency call service, which was started by Satyam on its own, has now been renamed as the Rajiv Arogyasri service and has been converted into a public private partnership project.

HENCE THIS TIME ALSO IT IS WIDELY BELIEVED THAT THE POLITICAL UMBRELLA MIGHT SAVE THE APPLE CART OF RAJU'S.

10. Government of India has already come in to the help of Satyam Computers Ltd as they appointed 10 nominees as directors to replace the current board. In view of the government superseding the truncated board comprising two independent directors (T.S. Prasad and V.S. Raju) and whole-time director Ram Mynampati, who is also an interim chief executive, the company has cancelled the board meeting re-scheduled for Saturday. The new board is expected to meet within seven days of its constitution.

THUS CONSIDERING ALL THESE FACTS I DO NOT THINK MY DECISION TO PURCHASE A CHUNK OF THE SHARES OF SATYAM COMPUTERS LTD at Rs.18.5, was a bad idea.

BUT THIS IS NOT A BUY CALL ON SATYAM COMPUTERS LTD, TO ANYONE OR TO ANY GROUP.