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Old 7th January 2009, 18:13   #91
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Well since you have indicated all the key conditions that were evident in Arthur Andersen's case also, did you know that they had to discontinue for the same reasons as below apart from shady business and consulting ethics. Result, they had no option but to liquidate. Today, they do have their brand name back and have been acquitted on several grounds, but no-one wants to deal with them. Insolvency is the way I see for Satyam, unfortunately. Sorry brothers, but ray of light is simply not there if we go by previous similar incidents.

And thanks Deetee, for bringing out the call/option play side of it. Don't know who all made money here by shortselling, but a lot of money was made on this stock today. Let's see whenever those figures come out in the open (like in the case of WTC).
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@Mission_Safari: This is fraud on so many levels, to the employees, shareholders, clients everybody

- The company has declared non-existent revenue, and the balance sheet isnt worth the paper its printed on. Every investor makes(or is supposed to make) investments based on studying the company's current and past performance.
- The company's ability to pay their employees is totally compromised - if the cash balance drops from 5300 crores to 300 crores, how will they pay salaries?
- Finally, the trust estabilished with customers/partners are severely compromised; who will trust a service provider who fudges their books?

All-in-all, I hope Satyam pulls through. I've relatives employed there; and a lot of my friends are Satyam folks. Hope they keep the company afloat and come back strongly.

Last edited by given2fly : 7th January 2009 at 18:17.
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Old 7th January 2009, 18:31   #92
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given2fly, i agree with your analysis but I hope you're wrong.
There's a lot at stake, not just for satyam but for the whole IT industry.
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Old 7th January 2009, 18:53   #93
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There's a lot at stake, not just for satyam but for the whole IT industry.
Rightly said! And therein lies the issue, not discounting the effect on the employees and stockholders of the firm concerned.

While we have all been pondering over family-owned and run businesses, what is the guarantee that group owned businesses arent dirty themselves? <Shivers at the very thought>
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Old 7th January 2009, 20:12   #94
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Very shocking to hear about this Satyam scam!

I am surprised to note that as per Mr.Raju's letter the Senior Management and executive Directors of Satyam were not aware of this scandle which was going on for some years!
What about the CFO? Don't tell me even he was unaware!

Tough days ahead for the Satyam Management, they'll have to face serious legal actions.

I feel sorry for the employees (Middle management & below), after doing all the hard work for the company, for no mistake of theirs they are stuck in this big mess, I hope they come out of this at the earliest.

Last edited by finneyp : 7th January 2009 at 20:21.
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Old 7th January 2009, 20:20   #95
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The investors are cheated and the guilty should be punished including the board members and auditors. However I am not sure if taking an entire company down for such actions is justified. After all promoter holding is hardly anything compared to the likes of DLF WIPRO etc. Companies like Hyundai have had scandals too. I think govt should step in and see to it that something is done soon and get the company back in shape. There are 55000 hard working individuals who dont really interact with people of CEO level anyway. So a new board or an acquisition can put it back on track soon. I really hope they put it back on track. There are far too many jobs at stake (am sure it will go over 250K if indirect jobs are taken into account)

One point to ponder is the reason why Mr Raju did something like this. As per his letter, he hasnt really made money out of this accounting. So was it only to keep power and position since promoter shareholding was low?

As for the stock price, we already have analysts saying it will come down to 10Rs. It has to be seen. If we go by Mr Raju's estimate of profit (I think 60crs as against 640)and cut down the price from a fairly valued 350 to a tenth, then does 35 make it fairly valued? I am not too much of a technical guy looking at positions, trends, charts etc. Just feel that a company which has everything going for it but for a stupid accounting practice and a shady promoter, might get another chance to set things right.
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Old 7th January 2009, 20:27   #96
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I think a independent board should be appointed to clean up the mess.

The company does have many clients and there are employees who are working on those projects. There might be some hard times but they should be able to see through this situation.

Maybe people from outside should can clear the situation. Theoretical management gurus, it seems were of no use.

PriceWaterhouseCoopers were the auditors.

Last edited by srishiva : 7th January 2009 at 20:32.
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Old 7th January 2009, 21:03   #97
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I am sure that government will come up with some acquisition plan on hand. This company is not limited to India, but is a global company and infact, it can hurt India's image also.
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Old 7th January 2009, 21:08   #98
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Quote:
This is fraud on so many levels, to the employees, shareholders, clients everybody
There are even wider implications.

When these giants companies operate, they often don't have liquid cash for more than over 30-40 days of day to day operation. They need to borrow money from various sources (banks, investors etc.) When the lenders give them money, they (lenders) also need to make them feel safe about their money i.e the borrower can pay back the money with interest.

But with this fiasco, institutions will be very much reluctant to provide more money as they now think Satyam can no longer afford to pay them back.

As a consequence, companies will have cash flow problem. This is what happened for GM etc. (though not resulting from any fraud as in this case).

As others already said, it will affect many other companies as well. The whole world already in a recession. Incidents like this is a death sentence on IT economy :(
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Old 7th January 2009, 21:15   #99
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very sad...:(

i have quite a few friends working for Satyam in many countries...i pray for them now...
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Old 7th January 2009, 21:48   #100
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Originally Posted by sgiitk View Post
We need to hang the auditors. Also, go back a few months the ratings agencies S&P, Moody etc did no better. AIG< bear Stearns, etc. were AAA one day and F the next, Some Rating!! Whom do you trust.
To continue on similar lines, which “expert” predicted the current economic recession (bordering depression) just one year back, apart from Dr. Doom (Nouriel Roubini) and may be a very very few others?

All the so called experts could not see what was to happen to the world when the “sub-prime” crisis hit the US a year ago.
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Old 8th January 2009, 00:35   #101
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Now and then
Go to this link and read what he spoke on 30th December 08,also read comments posted below by readers.
Satyam Chairman Raju's letter to employees- Software-Infotech-The Economic Times

This link is also worth read.
Now, Satyam board can not decide on buyback- Software-Infotech-The Economic Times

Last edited by ECM : 8th January 2009 at 00:37. Reason: Added one link
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Old 8th January 2009, 01:40   #102
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IMHO in today's economy the big island between forecasting & fudging financial data is rapidly disappearing. Satyam computers in an exceptional example. So was Denmark's IT Factory (about a month back). Both of them were audited by top consulting firms like PWC, Ernst & Young, and likes. They were showered with accolades and awards and made to appear stars second to none in more than one aspects. But then reality has a habit of waking us up from our dreams with a rude shock.

It seems we are living in a world where corporates have built for themselves a larger-than-life halo. Modern economics and breeding of smart MBAs by smarter American universities, the relentless pressures on producing "numbers", aggressive forecasting, the magical art of creating wealth overnight on paper not sustainable in reality have all contributed so effectively in pushing the world back by at least a decade. So much for that smart and fast Wall or Dalal street charms.

To cut a long story short - I'd certainly believe a very good proportion of individuals amongst us saw it coming. I saw it coming (& am no economist) based on simple trends. Reckless usage of credit instruments, symbiotic creditor-debtor relationships in loans, mortgages.. Hindsight is such a precise and wonderful tool Yet I put most of my earnings in shares and sitting on half losses. I picked up Satyam too, today! It is one thing to see it coming and another to actually act on it. That's because warnings were issued several times. But each time the momentum of ever growing greed won. And each time warnings sounded more feeble than before. I saw it coming but did not think that it will actually impact me too. And that it would be so so so gigantic! Or maybe anything less than a disaster would have failed in waking up all of us so fast.

We are human beings finally. Organisations are built and run by human beings. Today it is Satyam. Will there be X tomorrow? Or will this be a solitary example? I have a feeling it will not be. Because I have personally seen fine lines between forecasting and fudging modern day finance data and numbers crossed quite casually in very respected companies. Hope these are accounted for in the annual result instead of letting it snowball and feed the tiger out of manageable proportions. But then we are only human beings. In our disasters we rope in others as well!
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Old 8th January 2009, 03:07   #103
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I just spoke to a London based PwC friend of mine and he says there are a lot of questions being asked here on what is PwC's role and why they havent made a statement yet. I believe all employees have been asked to keep from making any statements to media and even the senior management is unwilling to answer any employee queries. He says it's likely they'll lose a lot of IT related business in the short term, irrespective of whether they have a hand in this or not.

I feel very sad for the employees of Satyam. Hope they are not subjected to too much trauma going forward
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Old 8th January 2009, 03:19   #104
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Originally Posted by abk View Post
We are human beings finally. Organisations are built and run by human beings. Today it is Satyam. Will there be X tomorrow? Or will this be a solitary example?
This guy is a joker/criminal. He tried to siphon off $1.5billion from the company he built and surprised all the stock holders including the ADR holders in NYSE. There was a lot of coverage on WSJ, and the international media. Then came the news that there were illegal dealings with World bank and the corruption charges. Now this.

Lets not discount all this as being human. He is a criminal, and should be tried according to the laws of the land. Equating Satyam to other Indian companies in the light of recent events would be disgraceful to other indian companies.
-Prasadee
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Old 8th January 2009, 04:05   #105
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Originally Posted by sanjaymugur View Post
that guy is worse than a terrorist, deserves to be hanged....
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Originally Posted by sgiitk View Post
We need to hang the auditors.
These are the worst posts i have ever read here on TBhp.

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Originally Posted by Mission_Safari View Post
How i interpret this is that by showing inflated revenue figures the share price was manipulated which in turn benefited Mr.Raju and family.
Mr. Raju had just 8% stake in SATYAM which has actually turned out to 5.15% as per Economic Times article after pledging of shares and others. So no one can believe he would be foolish to fix the books to gain very small (5.13%) of the company profits.

In fact if you can read the letter, it is clearly understandable that he made all efforts possible to get this issue resolved internally.

Deetee had mentioned few possible reasons for what could have been the reasons behind the fixing up over the years.

Lalvaz has valid points about auditors (Indian subsidy of Price Waterhouse Coopers in this case) and auditing practices.

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Originally Posted by sam003 View Post
MAYTAS is nothing but Reverse of SATYAM. So fraud is his mind from day one.

One word, he screwed up image of Indian IT companies.
Nobody starts a business with an idea to defraud. Please read the letter from Raju to know facts (according to him). Even if the part about others' ignorance is questionable, the reason behind this seems to be true. Do you remember ever praising Raju or SATYAM anytime when it was on the top? He came from an agriculture background, did his MBA from Ohio University and Owner/President course at Harvard He was also one among the persons responsible for the IT revolution in India. ( I remember using Satyam Online / Sify Dial up internet pack with my phone modem to connect to internet for the first time on my personal pc.)

He has received many awards for excellence and showed a strong social orientation and has been furthering the cause of social transformation through Byrraju Foundation and EMRI-108. To know more about Mr. Raju and his achievements, please check this Wiki article and this website.

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Originally Posted by theodore_ftw View Post
I feel Raju is just being used as a scapegoat. Everyone would have been hand in glove with this inflated books build up over the years.
This is exactly what i feel. What the hell were the regulators including SEBI doing all these years ? So if they couldn't sniff the fraud when things were fine, there could be another company in a similar situation today ready to explode in few days / months. Sorry but i could not help speculating on this part.

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Originally Posted by sj_koova View Post
This was just the height of greediness and does not deserve any sympathy.

But I wish and pray that only those who have taken part in this crime is punished and every other innocent souls (employees, investors, clients, partners and many more related with this company) are saved.
Are the investors not greedy? Why do FIIs and VCs invest in India ? They do it only to make x times what they have invested. Who is not greedy? Don't the investors know to not invest anything more than what they could afford to lose in the shares ? If no, ignorance is not a bliss and let them be punished. This could be a harsh statement from my side but they are no good ones to curse Mr. Raju and management of Satyam for the misfortunes. After all Mr. Raju was not running some Ponzi scheme or its kinds. To err is human.

I did invest in some business and lost considerably and i know the pain of losing so you can understand that i am not a person who sit here and typing crap with out any work.

Few invested even by getting loans at higher rates when SATYAM was a blue chip and now i see losers ranting on TV saying SATYAM as ASATYAM and SATYANASH and other crap.

I feel it is the over (re)active media which literally is now a days getting on with creating news rather than reporting news is primary cause for the turn of events to get so ugly manner in such a very short span of time.

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Originally Posted by prasadee View Post
This guy is a joker/criminal. He tried to siphon off $1.5billion from the company he built and surprised all the stock holders including the ADR holders in NYSE. There was a lot of coverage on WSJ, and the international media. Then came the news that there were illegal dealings with World bank and the corruption charges. Now this.

Lets not discount all this as being human. He is a criminal, and should be tried according to the laws of the land.
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Originally Posted by getsurya View Post
Friends, Keeping emotions aside, this is unacceptable.
True. But does the law has its own course ? No. The cases take years - even for a petty robbery case and nothing is ethical especially when it comes to Indian Law. Why are the white collar cases of last 2 decades still pending judgements for the never ending trials ?

Good luck to all SATYAM employees, management, investors and all those who are directly or indirectly linked to SATYAM and i pray for a better solution of all of them including Mr. Raju.

P.S: I do not work for SATYAM and i am in no way linked to Satyam.

Last edited by TrueDreamer : 8th January 2009 at 04:15.
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