We are Big Time Crooks, Confesses Satyam
After getting his ass whipped by irate investors over the proposed $1.6 billion acquisition of two building companies Maytas Properties and Maytas Infra with close links to the Raju family, Satyam Computer Services Chairman B.Ramalinga Raju has decided against going ahead with the deals.
The Raju family has significant stakes in the Maytas companies (Maytas is Satyam spelled backward) raising corporate governance concerns that triggered downgrades by Citigroup and JP Morgan Chase.
Raju tried to justify the acquisitions saying that it would ‘de-risk our core IT business by adding a new – yet well-established – business vertical in infrastructure’ but the investors refused to buy any of that.
On Wall Street, Satyam Computer’s ADRs fell nearly 55% to $5.70 Tuesday on the news of the proposed acquisition.
After the stinging rebuke from investors, Raju said on Tuesday:
We have been surprised by the market reaction to this decision even though we were quite positive about the merits of the acquisition. However, in deference to the views expressed by many investors, we have decided to call off these acquisitions.
Satyam was the biggest percentage price decliner on the New York Stock Exchange Tuesday, according to the Wall Street Journal.
And on Wednesday, Satyam Computer’s shares plunged nearly 31% in mid-day trading on the Indian bourses as well.
Irreparable Damage
We think Raju has done irreparable damage to the image of Satyam Computer in the eyes of investors by his ill-considered actions.
In the current volatile economic climate, investors are extremely wary of anything that does not seem kosher.
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Investors To Satyam Raju – Drop Dead added by SearchIndia.com on
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one of the Big Four Consulting firms had advised Satyam to go in for this move …..
The way he went about that was wrong …he should have shared it as a proposal …with all the details and tried to explain the merits ………
Satyam is not a typical IT company started by IT geeks ……the promoters are essentially Businessman who will invest ……wherever they get maximum returns ……so moving to a diff industry ….wherein they already exist……..is really not a surprising / bad move ………also those family owned enterprises (MAYATAS) are doing great with some good contracts to be executed in the near future ……….
Hyderbad Metro Rail Contract is with MAYATAS …..so the companies are going to be money spinner’s …… Satyam Shareholder’s would have got shares of those firms also ….
Infrastructure and realty are available cheaply now ….and have a bright future ….better than IT …..
A more matured response would have been for investors to ask for details ……study the proposal …..and then raise specific valid concerns ……maybe if they feel that they are getting a raw deal …they could have asked for more or junked it altogether ……the response here was typical of MP’s in the Parliment ….who oppose without knowing anything at all
Reliance is a best example of a conglomerate ….nobody even battles a eyelid ….when they get into all soughts of unrelated business or merge / Demerge companies at will ….Companies like TATA have used TCS to finance CORUS and JAguar buyouts …….
Raju is a successful Businessman and has proved his worth …so personal accusations are uncalled for ..
SearchIndia.com Responds:
1. Under the present business climate, with investors so jittery because of tremendous losses they’ve incurred Satyam’s move was not prudent.
Bottomline, Raju wiped out hundreds of millions of dollars in shareholder value (they recovered to some extent today i.e. Wednesday) by his actions Tuesday.
2. Jaguar is another looming disaster. Why Tata went & acquired that brand beats us.
We doubt anyone is buying that junk here at all.
3. You write: nobody even battles a eyelid
Obviously, you had a lousy English teacher.
You write: nobody even battles a eyelid
Obviously, you had a lousy English teacher.
Batted , Battling , flashes ..all words are used … anyway what’s the correct version according to you ? .
BTW – Teachers are never lousy ….most often than not students are ..
SearchIndia.com Responds:
The widely used expression is bat an eyelid and much less frequently battle an eyelid.