Home Strategy No answers from Satyam yet, but new surprises

No answers from Satyam yet, but new surprises

After a spectacular admission from Satyam's CEO, Ramalinga Raju, that around $1b worth of assets weren’t real, a webcast press conference delivered a few surprises coupled with the unsurprising news that the new management was still urgently looking for answers.

Satyam Computer Services, is one of the biggest IT firms in the world, with operations in 66 countries and providing services to 185 of the top Fortune 500 companies, but following the financial scandal has instead now been dubbed “India’s Enron”.

Yet much of its assets and claimed 24% margin have turned out to be imaginary, as explained by its now disgraced CEO in a letter that has instantly become famous.

Based in Hyderabad, there are still plenty of unanswered questions over the Satyam scandal, and from the looks of a press conference, held yesterday at 5pm IST, no-one yet knows whether Satyam can apply a heavy dose of its “business transformation” rhetoric to save its own skin and emerge intact from this ordeal.

Indeed, given the true status of Satyam is yet to be determined by management and the rest of the world alike, is the Hyderabad-based tech behemoth set to turn into a hydra-like monster… gone bad?

The press conference, led by new interim CEO Ram Mynampati, saw reporters asking how any of Satyam’s statements could be trusted, if there was enough money to cover employee payments through January, how quickly its financial statements would be re-issued, why none of the executives at the press event knew anything about the true margin situation and more.

The main answer, repeated over and over, was that the Satyam scandal was but 36 hours old, people were working “around the clock” to get answers, and when answers were available, they would be forthcoming.

Mynampati also stated that Satyam had received a lot of support from its customers who had pledged to stick with the company, although the sincerity of those pledges is naturally yet to be seen.

One revelation was that the company’s CFO had not come to work this week over “personal reasons” and would be back at work from Monday.

Later in the conference it was revealed that the CFO had also submitted a resignation – but that it had been rejected by the new management.

This caused a stir with the press who demanded to know why this detail was left out when the CFO was first mentioned, but was brushed aside with the assertion that the resignation was rejected and the CFO would be there on Monday to help unravel the mystery and the mess.

So, where's Satyam's chairman, co-founder and now ex-CEO, Ramalinga Raju - and what else was revealed? Please read on to page 2.


Satyam’s disgraced ex-CEO is also seemingly in hiding, with the executives present admitting they didn’t know where he was, presuming only that he was still in Hyderabad, and that no complaint to police had yet been lodged.

When challenged as to why this was the case, seeing as a confession had been made in a public letter, the executives effectively said they were still going through all aspects of the business and would file a complaint in due course.

It was also admitted that Satyam’s banker, Merrill Lynch, had abandoned the company, that it would need to find a new banker, and that its cash position was very weak.

Also revealed was the information that Price WaterhouseCoopers (PwC) was still the company’s auditor, despite seemingly having presided over audits that now appear to have been patently false, and that investigations into exactly what PwC was auditing are underway.

Ultimately, the executives seem to be taking the right course of action, especially presuming that none of the new management team was in on the scam as they all claimed. 

Without a clear and true picture of the company’s actual position, the right course of action is unclear.

Still, with an 80% drop in its share price and the press baying for blood and demanding answers quickly, the new management team has very little time on its hands to stabilise the situation, get the true information out and re-assure its customers of service continuity.

No doubt Satyam’s competitors are already trying to steal its customers, placing additional pressure on the beleaguered company.

What document on Satyam's own site gives some insight into Satyam needing to eat its own dog food to perhaps get out of this mess? Please read on to page 3.


A fascinating article on “What [business] transformation should mean to you” is available on Satyam’s site.

Written before the scandal erupted by its now new interim-CEO Ram Mynampati, the document easily describes part of the process Satyam itself must now take to restore confidence in the company and emerge Phoenix-like from its ex-CEO’s ashes.

If Satyam’s “dog food” really is as tasty as it has always suggested, Satyam will be eating it aplenty to transform its own business in addition to those of its customers.

Whether it will remain as a company with 53,000 employees and all its customers intact is, on the one hand, highly doubtful, as a scandal of this scale couldn’t possibly go unpunished, with customer losses and staff cutbacks of some kind surely inevitable.

That said, Satyam seems to otherwise have the strength in IT and people to bounce back from this crisis and remain a major global IT player, at least after the pain of sorting out the mess.

We’ll all just have to wait and see, just as the new executive team, Satyam’s customers, analysts and the press are all waiting… for answers.

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Alex Zaharov-Reutt

One of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

 

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