First Global India has a nice comment on SAY this morning: Let’s say one thing upfront: we think Ramalinga Raju is an amateur. He is not the first promoter in the world to have cooked the books. Nor will he be the last.
But the weird mea culpa letter is something that is bizarre to say the least. This is not the way professional scamsters work. We doubt if there has ever been an instance of a promoter sending in a letter like this, right upfront. Jeff Skilling didn’t do it. Bernie Ebbers didn’t do it.
So, Mr.Raju was neither a good promoter nor a good scamster. And that is the final writing on his epitaph.
What happens to Satyam now?
It’s history.
The stock could go to zero or near-zero.
After all, no US IT major will go near it to sniff at Satyam’s books. They will need to hire one of the Big Four Accounting firms for a due diligence! Think about that…
No. Satyam is way too risky a deal. Clients will walk. Key employees will walk. There is no cash worth the name, on the balance sheet. And the so-called “genuine” is .loss making. As stated in Raju’s letter, Q2 FY09 had an OPM of only 3%...which means the overall business of Satyam is loss-making, at the net level. And is also cash negative, as is clear from Raju’s letter that he was pledging stock to raise money to keep Satyam’s operations going.
So all holders out there: get out while you still can. This stock has a bottom that you don’t want to see materialise.
Notablecalls: What can I say? High five to ABN Amro for upgrading SAY to Buy from Sell yesterday!
I think i have an interesting point to make. They say little knowledge is too dangerous. But having watched satyam's events on daily basis, i am quite sure there is a big probability, that my claim can be true ,though its definitely a dangerous claim.
ReplyDeleteWhat if this ramalinga raju's letter is just a big "Lie" .
I am going to make some assumptions here:
1. Maytas was really the source of trouble and never it was satyam, as raju claims.
2. There were no inflated profits and Satyam's balance sheets are clean.
These assumptions leave us with the question - "Then why Mr.Raju has to give a letter that the profits were inflated" - which leads to third assumption of mine.
3. Mr. Raju had diverted money from satyam's balance sheet into Maytas or somewhere and claims that there were artifical money due to inflated profits.
Now this is a interesting deduction and most of you are going to dismiss it by saying they are just assumptions. There is a strong reason why this can't be just assumption.
Answer this. What could be the reason for Mr.raju to inflate the profits. Do you really think the fear of competition and need of posting good margins can drive a person of his stature, to risk his life and to commit such a big fraudualent activity.
Being from India and this industry
ReplyDeleteI 100% agree with u...
For people not from India..
THis way he pays off his 1 billion dollar debt in real estate market
case will go on for 15 years without any result....
but if he had not paid his real estate debt ( mosty from mafia and politicians)..he die...
This is what is going on
Satyam will be bought over by someone soon for decent price