Satyam in a jittery !!

Satyam Technology Solutions, India's fourth largest Information technology company was in a state of jittery last week. Apart from feeling heat from global meltdown and loosing some of its biggest clients, it faced an allegation under Corporate governance. Last week, Satyam management decided to take over Maytas Infrastructure and Maytas Properties the companies manged by 54 year old Satyam CEO Mr. B. Ramlinga Raju sons.

The Satyam Maytas deal was valued arround 1.6Bn$, and investors doubt that due to economic gloom Satyam wants to shift its interest from Information Technology to infrastructre business.

The announcement of the deal results in the 55% drop in the value of the ADR in NYSE in US. Within an hour Satyam Investors lost about 2Bn$ at NY bourses, even at BSE Satyam shared suffered a huge hit.

After govt. ordered an investigation in Satyam decision, the Satyam mangement retracted their decsion and cancelled their decision for the bid. At the same time in order to improve the investor sentiments, Satyam CEO decided to go for a buyback or a higher dividend.

This decision certainly hurt investors sentiments, not only toward the Satyam company, but towards the entire Indian IT sector.

So the real question is Will other IT companies will use their cash reserve in doing acquistion in their own sphere, or will their diversify in different sectors to improve their revenue options ?

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Thanks&Regards,
Mohit