Satyam Turns Out to be a House of Cards (SAY, INFY, WIT, PIN, EPI, IFN)

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By Douglas A. McIntyre Updated Published
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Burning_money_picIf you are one of those who cannot stand Indian IT-outsourcing firms, you probably just got another feather in your cap. India’s Satyam Computer Services Ltd. (NYSE: SAY) is turning out to be a house of cards.  Shares closed at $9.35 yesterday after many recent troubles, and that was already down two-thirds from their highs.  Things are worse this morning.  Much, much worse.

The company’s Chairman Raju admitted to cooking the books for the lastfew years.  It seems the company had phony profits and a highly inflated balancesheet.  He resigned and another director resigned.  Indian officials areexamining the role of auditors and the role of directors.  This is allon the heels of what was going to be one horrible mismatched merger inrecent weeks.

DSP Merrill Lynch has also withdrawn as the company’s advisor.  Aboutall that can be said on the decency side here is that the company’sboard of directors is still meeting this Saturday.

The last trades early this morning are  under $3.00 pershare.  MarketWatch even put out a headline with the reference of theIndian-Enron.

Interestingly enough, this killed India’s overall stock market morethan it hurt IT-outsourcing competitors.  Infosys Technologies Ltd.(NASDAQ: INFY) is hardly down this morning.  Same goes for Wipro Ltd.(NYSE: WIT).

The Bombay SENSEX fell by 7%.  You might as well expect weakness to be seen in the Powershares India (NYSE: PIN), WisdomTree India Earnings (NYSE: EPI), and the India Fund, Inc. (NYSE: IFN) for additional fallout.

Jon C. Ogg
January 7, 2009

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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