If a stock dives 55 percent, is it time to go bargain hunting?
Absolutely not! At least that was the case with India’s Satyam Computer Services after it shocked investors on Wednesday by disclosing most of its profits were cooked up.
The disclosure came after the company’s botched attempt last month to buy two construction firms partly owned by its founders, which sent its shares diving 55 percent in one session by angry investors.
Chairman Ramalinga Raju said: “It was like riding a tiger, not knowing how to get off without being eaten.”
The shares tumbled nearly 80 percent, roiling investor confidence in India and bringing an undignified end to the illustrious career of one of the country’s top businessmen.
The accounting fraud which analysts instantly dubbed as “India’s Enron”, battered confidence in Indian companies and cast a shadow on the once-booming outsourcing industry.
The biggest Indian corporate scandal in memory threatens future foreign investment flows into Asia’s third-largest economy, already facing slowdown pangs.
The scandal rakes up a number of issues not to mention how profits could have been inflated for several years without anyone noticing. Knock Knock. Independent directors? Anyone listening?
And all this from a company which won an award for corporate governance just three months ago.
Any answers?
(Please ignore the analyst recommendation for Satyam currently running on the Reuters site. Preliminary investigations suggest there seems to be a technical glitch. We are looking into it)
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Satyam is much worse than what happened at Enron. Check out this analysis: http://commentsoncredit.blogspot.com/sea rch/label/Satyam
- Posted by allaroundguyIt does not send a good signal to international community. But india can bounce back,
- Posted by astrosolvethis is time to support raju, he is better than many politicians he accepted what he did. he is ready to follow law’s.he is great great great.
- Posted by arunWhatever Rajau and bros has done, they have done a wrong thing and they are paying for it. But lets all be fair that the other employees are not at fault. As commented by the OLD MONK narayan murthy that we should not hire Satyam associates. I agree that some felows who are purely from hydrabad, they think the company as thereself and just consider the other non telugu associates as mere workers. I have a lot of example like that. One manager in Singapore Satyam, Bha…. Ve is very exagerating… AAAAyooo this fellow is too much maaa! Ofcource this company is everyones but this fellow shows that he is ONLY the most concerned. hello mr Bha…. V just get it cleared that this attitude of yours is giving the negative image to the Clients, to the associates working under you and all. WE ARE ALL SATYAMAMITES… and not the only YOU… Change ur triebbele attitude man. there is nothign like ONE man Show. Hope you got it. I have been tortured already and now I dont wnat the same to be happen to other collegues who are still there with you in Singapore.
- Posted by Calvin CleanSatyam affair is truly one of a kind..It is very curious why the chairman wrote a confession letter all of a sudden?What or who made him write such a self-destructive letter.. The affiliates who dabble in the real estate and infrastructure have bagged huge projects and big plans which were to be apparently funded by the non-existent Satyam money..? Once the market showed its disapproval by beating down its ADRs the Co. withdrew the proposal the next morning itself!.Now after 2 weeks whatever happened in between? this is the intriguing question..It is also strange that the present &former CMs of the AP state to which Satyam belongs chose to distance themselves away from Satyam blaming one another of”helping Satyam grow” which makes everything very curious indeed..
- Posted by selvamWhy did such a star get on a tiger in the first place???
- Posted by PaulHe has started it and he has ended it.
- Posted by CharlesInfosys is more associated with Satyam’s “tainted” than even Raju.
One of the reason Satyam does not have a buyer is the scare-mongering by Infy.
- Posted by BrijeshHi,
- Posted by ShwetankIts really very very disappointing what happen with satyam. but the most disappointing thing for PwC. How it is possible to overlook such a big fraud easpecially by the auditors of PwC who claim their superiority for the quality. its really disgusting for PwC as an auditor of the Satyam.
Good luck Satyam and Satyamites…
Wake up, a crook is a crook even if he does nice thimgs with the stolen goods. Its very convienent for narrow minded fools to blame the USA for this, stand up and take your medicine. India you cant blame every body for you own mistakes.
- Posted by Brian Baxtervery bad, i pray god to come out from this situataion as early as possible.
- Posted by kvsmurthyYoung arrogant and proud but hard working and ‘visionary’ ‘immature’ became a pray for politicinas and now eaten by the ‘tiger he was riding’.
- Posted by Rajaram PagadalaShould be lesson for others.
bailout, as mentioned by one, is going to create more problems. India is a land where people like easy money without doing the hardwork. If satyam gets bailed out and rechristened as a PSU, it will simply keep on doing the same thing again. And Indian government sector is more open to such scandals, given the political cover they recieve. The story will simply contnue.
- Posted by icitizenCorporate India shoudl change the mindset. Making money by cheating customer, shareholders and employees is not a good thing. Corporate India always fail to realize that. Thats the problem!
It is shocking to see one of the foremost software giants to get into financial scam. Tremors are so high that i dont think it will ever get up and get going. May be nasty statement but SATYAM saga ends here and one fine day it has to part from this business, it may be taken over by another one and true lies will pay heavy price
- Posted by anuSatyam was,is and will remain one of the TOP company no matter what happens .The SPIRIT OF SATYAM is very high, all the EMPLOYEES AND LEADERS are united and stand by Satyam and will do their BEST to come out of it.
- Posted by raneeALL THE BEST FOR SATYAM
What about a bail out option? Like Raja (Communist) said, Govt. should take over, then all Satyam Mannavadus will have Govt. jobs. Also we should concider Bharath Rathna for Raju, who will be creating the max. job in Govt. sector, current CM. R. Reddy and Ex. CM. C. Naidu, should be hailed for exclusive growth (inclusive??) More such companies should fail, then we will have more take over by Govt. more employess will have safe jobs. Ideal time calculation software should be abolished as we will have only Ideal time if we are in Govt. Sector. Win Win for all all Mannavadus
- Posted by view0507All the Statements coming from the company simply represent GREED & DECEPTION in its purest form. It is obvious even to a layman that more BIG people are involved in this scam. Attempt is being made to buy the BAILOUT by sheilding OTHER BIG PEOPLE. There is not an IOTA OF TRUETH EVEN IN THE CONFESSION THAT ONLY PROFITS WERE INFLATED. Simply, the money was SYPHONED OFF and the company was STRIPPED.
- Posted by neeruI think he is still lying. The fraud that he is talking about is a simple fraud which is not so easy to hide. I am sure the auditors could have easily detected this fraud. Mint has an interesting perspective. They say that based on what he’s said, it’s impossible that Satyam would be operating on such a low operating marging of 3%. Hence the only logical thing is that he has siphoned off the money and this whole thing is a charade.
- Posted by MumbaiGreed Kills!
- Posted by Anindahi, indians..
small fish eat big fish. this is the globaligation. no democracy, no independence in our country and any country. so, comman man’s only one anmy is ‘imperialist’.
- Posted by mallemputi adinarayana