The Hindu Business Line : Satyam posts lower Q3 net

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Hyderabad Jan. 19 Satyam Computer Services Ltd has recorded a 30.38 per cent lower profit at Rs 343.30 crore for the third quarter ended December 31, 2006, as against Rs 493.08 crore for the corresponding period last year, which included Rs 262.83 crore from the Sify stake sale.

But if only the software service income was taken into account for the third quarter, it is higher by 30.45 per cent at Rs 1,594.87 crore as against Rs 1,222.63 crore same period last year.

The software revenue was up 3.72 per cent and profit after tax was higher 6.50 per cent sequentially. Margins improved 205 basis points sequentially on the back of operational efficiencies and increase in offshore engagement, the company management announcedon Friday.

On a day when the index witnessed volatility, Satyam stock took a beating. The Satyam share was down at Rs 489.10 as against the previous close of Rs 514 at the NSE.

The Satyam Chairman, Mr B. Ramalinga Raju, said "the company's performance was heartening with a revenue growth of 7.7 per cent sequentially in US dollar terms. It translates to 3.7 per cent in rupee terms due to stronger rupee during the quarter. The revenue growth was accentuated by 11 per cent offshore volume increase."

Based on the current performance and pipeline, the company has indicated revenues in the range of Rs 6,434 crore-6,442 crore, reflecting a growth rate of 34.3-34.4 per cent. Providing insights into the business, Mr Raju said Q3 witnessed higher contribution from Europe at 19 per cent, and consulting and enterprise business solutions accounted for 42 per cent of revenue. Addressing a media conference, Mr Raju sought to put to rest some speculative reports about sale of stake to a large global systems integrator. "We firmly believe that enhancement in shareholder value is best when we continue to pursue the already successful global delivery model that we specialise in," Mr. Raju said and added "Satyam shall not indulge in any such pursuits of being acquired."

The Chief Financial Officer of Satyam, Mr V. Srinivas, said the third quarter was a witness to higher margins despite a negative impact of 120 basis points on the margins due to rupee appreciation, which lead to about Rs 35 crore forex loss.

Asked about the market reacting negatively to Satyam performance, Mr Raju said "We have done well and the market would factor the performance of 8 per cent quarter-on-quarter growth. On a day when the index was down, there is bound to be some impact. Significantly, one cannot judge a company's performance based on 60 working days in a quarter, they need to look at the overall perspective."

While the company management stated they remain positive about the market demand fuelled by increasing budgets for IT spend and rising outsourcing deals, the company has revised the US GAAP revenue guidance upwards. With rupee appreciating, the EPS growth is projected at 37 per cent.

Satyam subsidiaries, including Nipuna (loss of Rs. 5.34 crore), have had mixed performance with some registering marginal losses, and others profits.

As per the US GAAP, Satyam recorded total revenues of $375.6 million and net income of $71.1 million for third quarter as against $281.8 million and $57.2 million for the corresponding quarter last year.

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