Satyam Q3 profit falls 2.2%, shares plunge

Friday, 24 January 2003, 08:00 Hrs
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NEW DELHI: Satyam Computer Services, one of India's software development and services majors, Thursday said its October-December quarterly profit dropped 2.2 percent from a year-ago period as overseas clients pared orders.

The loss announced by Satyam Computer, India's fourth largest software exporter, was sharply lower than the market expectations, triggering a massive sell-off in the stocks of the company.

Mirroring the bearish sentiment, the Satyam counter, which has a six-percent weightage in the benchmark 30-share Bombay Stock Exchange index, plunged 6.9 percent to touch 242.25.

Hyderabad-based Satyam said its net profit for the quarter ended December 31, 2002, was 1.17 billion, down from 1.19 billion in the October-December quarter of fiscal year 2001-02.

Total income of the U.S. stock market-listed Satyam Computer, on the other hand, rose 16.9 percent to 5.21 billion in the third quarter, up from 4.46 billion logged in the same period the previous year.

The income from software services at 5.22 billion, though falling short of the guidance of between 5.25 billion-5.40 billion, reflected a year-on-year growth of 19.85 percent.

The company also cut earnings and sales estimates for the fiscal year to March 31, 2003, reflecting tougher market conditions facing Indian software makers.

"The Q3 results were below our expectations and our analysis shows two prime reasons for the revenue being lower than guidance and the downward revision in guidance for the full year," said B.Ramalinga Raju, chairman of Satyam Computer.

"First is the lower than anticipated ramp up of revenue from a few customers added in the current and previous years.

"And, secondly, we were negotiating a very large deal that was to result in multi-million-dollar revenue in each of the quarters. That was suddenly put on hold," Raju told analysts.

Satyam lowered its estimate for full-year earnings per share to 14.57-14.66 from 16.06-16.26 forecast in October, and cut sales growth forecast to 14 percent-15 percent in dollar terms from the earlier 18 percent-20 percent.

"Clearly, the changing nature of customers' IT spending and continued uncertainty in their markets has brought in some unpredictability to our forecasts," said Raju.

"What is certain, however, is that the thrust on off-shoring continues to be high, presenting opportunities for long term sustainable partnerships and growth," he said in a statement.

"The investments we are making in high quality people, processes and marketing are bound to yield good results in the coming quarters."

Satyam Computer added 24 new customers during the quarter. Six of these were from the Fortune 500 list. The company now has 76 Fortune 500 clients compared to 57 in the same quarter of the previous year.

Some prominent client additions include a leading beverages company and Japanese automobile giant Nissan, said a company statement. Employee strength also went up by a gross of 700.

Nipuna, the business process outsourcing (BPO) arm of Satyam Computer Services, forged business tie-ups with four reputed organizations in the past quarter.

"The pilot project for taking over the back-office processes related to assembly line for the engine division of a large U.S. construction equipment manufacturer has commenced," the statement said.

For one of the world's largest providers of telecom information networking software company, Nipuna is also executing a pilot project for providing helpdesk services.
Source: IANS
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