The Satyam “Saga” took a dramatic turn on Wednesday with B. Ramalinga Raju, the chairman of Satyam Computer resigning from the company’s board. In a shocking disclosure, he admitted some financial irregularities in the company, including an inflated cash balance of Rs 5,040 crore.
So is it possible for one of world’s best known businessman to make mistakes? Or was it only greed or some compulsion. Well, it did happen at Satyam Computers.
Mean while reports indicate that at least 120 of Satyam's employees from the lower and middle rung management have resigned after the Satyam-Maytas fiasco broke out and as many as 100 more, including the senior level management, are waiting to take a decision after the board meeting expected to take place on January 10. Meanwhile, DSP Merrill Lynch has terminated all its engagement with Satyam.
IT companies across the country were shocked at the incident and have strongly reacted to the episode. Here are some of the reactions from top-notch CXOs from various companies.
Kehav Murugesh, President of Syntel Inc, a global outsourcing company reacting to the Satyam saga said, “It is unfortunate that there is so much attention on the company now for the wrong reasons. It is difficult for their employees and clients to ignore the situation and there could be an impact on performance as a result. Good governance, transparency and following not just the letter but also the spirit of the law must be the supreme endeavour at all times and that is not necessarily a learning from this episode alone. There has been talk of overseas investors painting all IT companies with the same brush but I am confident that investors and decision makers are very mature and insightful and will easily separate the wheat from the chaff. Syntel being a global organisation that is registered and listed in the US follows the highest governance standards and is SOX compliant.”
Regarding the Satyam story, Phaneesh Murthy, CEO, iGATE said, "An old moral - no amount of pressure should force dishonesty. This is where values should hold up. The market is bad enough. On top of this, visits are curtailed because of the Mumbai incident - this elongates and delays sales cycles."
Nagaraja (Naga) Prakasam, Managing Director of CDC Software (India) said the Satyam episode brings a number of lessons for organizations namely the importance of Corporate Governance. This will clearly have the beneficial effect of having all companies look at good governance processes, such as a enhanced role for independent directors.
V. Balakrishnan, chief financial officer, Infosys, said the developments at Satyam is shocking, unbelievable and sad it has happened in India. So, should one be concerned about the industry at large? "I don't think it is a reflection of the industry or India. It is an isolated case, just like Enron in US. The regulators should get into the case and punish them. It is important to bring back credibility."
Balakrishnan added that Satyam has cooking up the books for a very long time... "they have done it systematically... it is shocking that it has gone unnoticed."
He added that Infosys will address the concerns of clients. "It is for the regulators to address issues, and avoid any such thing in the future."
L. Subramanian, CEO of Chandamama.com, a children's website with stories on Indian Mythology said, "It (The Satyam episode) is probably one of the most serious cases of breach of fiduciary responsibility that has come to light in India. After all the recriminations, I hope that wisdom will dawn on the regulators to figure out how to prevent such incidents rather than react to them. I think it is the trust placed by over 50,000 employees of Satyam that has been shaken, besides that of the shareholders. My one single question is - 'where were the myriad auditors - financial, cost, management, quality systems auditors... surely someone knew that there was rot in the system and chose to keep quiet?"
Ramakrishna Voruganti, Managing Director of Barracuda Networks, a global leader in email and Web security said, “ I think Mr. Raju’s moving out will give Satyam a much-needed chance to take some hard decisions regarding restructuring, governance and their approach to customers.
It would’ve more difficult to take difficult and independent decisions, with Raju at the helm.”
Suresh Sambandam, founder & CEO of OrangeScape, a leading Chennai-based software product company said, “The sequence of events at Satyam is very shocking and unfortunate. While all of us appreciate the seriousness of the issue, it is important to treat this as an isolated failure of corporate governance. Media and industry forums should work closely and use all possible options to uphold the fame and reputation of the Indian IT / BPO industry.”
“The corporate governance needs to be stronger, said Ajay Dhir, CIO of Jindal Stainless Ltd. reacting strongly, he said and the role of the independent directors, who act as the watch dogs needs to be more assertive.”
R. Mohan, Director of Cache Technologies & Communication Ltd, a leading Singapore-based enterprise infrastructure solutions said, “The Satyam incident brings to light to need for proper governance and compliance that is not in place. To prevent such things from happening especially for family-held companies the government should impose stricter norms.”
Jagan Mohan Raju, executive of ADP India Private Ltd, a Hyderabad-based leading providers of business outsourcing solutions said, “Satyam is a very strong brand not only in India but also has a global identity. I think what has happened is very unfortunate. Organizations build over a period of time should be more responsible towards its stake holders including investors, employees and customers. They should be more ethical and should not bring their personal agenda to compromise at the stakeholders’ interest. More over, the issue has been kept away from the board is very unfortunate. I feel that Satyam’s employees’ campaign on Mr Raju is a very positive one.”
Wednesday, January 7, 2009
Is IBM likely to layoff 16,000 jobs?
International Business Machines Corp, the biggest technology employer, may cut thousands of jobs this month amid the global economic slowdown, according to the employee group Alliance for IBM.
Employees have been hearing that layoffs will take place in late January, said Lee Conrad, national coordinator of the Alliance, an organization seeking union recognition at Armonk, New York-based IBM. The size of the reduction may be larger than those in the past few years, he said in an interview.
Generally they go in batches of a couple hundred here and a couple hundred there,” Conrad said.
A post on the Alliance’s website said the company may cut 16,000 jobs, which would top the 15,600 eliminated by Chief Executive Officer Sam Palmisano in 2002. The worldwide slump has tightened companies’ technology budgets and IBM may report a 1.6 per cent drop in sales last quarter to $28.4 billion, based on the average analyst estimate.
“There’s likely to be production cutbacks at IBM,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC in Bedford Hills, New York. “There will be job cuts. For now, reducing the workforce to benefit the viability and competitiveness of the company makes sense.”
Solaris, which oversees $2 billion, held 29,000 shares of IBM as of Sept 30.
IBM rose $2.41, or 2.8 per cent, to $89.23 at 4 pm in New York Stock Exchange composite trading. The shares lost 22 per cent last year.
‘Rebalance our workforce’ IBM has frequently pruned its staff over the past few years. The company had two waves of job cuts in 2007, totaling more than 2,000 positions. IBM had $318 million in job-reduction costs that year, compared with $272 million in 2006.
“We constantly rebalance our workforce and continue to invest in growth areas,” said Ian Colley, a company spokesman. He declined to comment further when asked about the Alliance posting.
IBM had 386,558 employees at the end of 2007. Palo Alto, California-based Hewlett-Packard Co, the world’s largest personal-computer maker, had 321,000 as of Oct 31, and Panasonic Corp, based in Osaka, Japan, had 313,594 as of Sept 30.
Agencies
Employees have been hearing that layoffs will take place in late January, said Lee Conrad, national coordinator of the Alliance, an organization seeking union recognition at Armonk, New York-based IBM. The size of the reduction may be larger than those in the past few years, he said in an interview.
Generally they go in batches of a couple hundred here and a couple hundred there,” Conrad said.
A post on the Alliance’s website said the company may cut 16,000 jobs, which would top the 15,600 eliminated by Chief Executive Officer Sam Palmisano in 2002. The worldwide slump has tightened companies’ technology budgets and IBM may report a 1.6 per cent drop in sales last quarter to $28.4 billion, based on the average analyst estimate.
“There’s likely to be production cutbacks at IBM,” said Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC in Bedford Hills, New York. “There will be job cuts. For now, reducing the workforce to benefit the viability and competitiveness of the company makes sense.”
Solaris, which oversees $2 billion, held 29,000 shares of IBM as of Sept 30.
IBM rose $2.41, or 2.8 per cent, to $89.23 at 4 pm in New York Stock Exchange composite trading. The shares lost 22 per cent last year.
‘Rebalance our workforce’ IBM has frequently pruned its staff over the past few years. The company had two waves of job cuts in 2007, totaling more than 2,000 positions. IBM had $318 million in job-reduction costs that year, compared with $272 million in 2006.
“We constantly rebalance our workforce and continue to invest in growth areas,” said Ian Colley, a company spokesman. He declined to comment further when asked about the Alliance posting.
IBM had 386,558 employees at the end of 2007. Palo Alto, California-based Hewlett-Packard Co, the world’s largest personal-computer maker, had 321,000 as of Oct 31, and Panasonic Corp, based in Osaka, Japan, had 313,594 as of Sept 30.
Agencies
Tuesday, January 6, 2009
FIEO estimates 10 million layoffs in export units
Ten million people in the export sector will be out of job by March this year, as Indian goods find fewer buyers in the international Coming to terms with layoffs market which is battling the worst crisis since 1929.
"There will be 10 million job losses by March," Federation of Indian Export Organisations (FIEO) President A Sakthivel told reporters here on Tuesday.
Indian exports, which account for just about 20 per cent of the country's Gross Domestic Product, are a highly labour-intensive activity, employing 150 million people.
The country's exports, which posted a robust 30.9 per cent growth rate in the first half of fiscal, contracted by 12.1 per cent in October, for the first time in the last five years. The negative trend continued in November, when exports fell to $11.5 billion from $12.7 billion. The data for December are yet to be released.
"I can safely say that negative growth trends will continue in December and in the next couple of months... I hope we will end the fiscal with exports of about $175-180 billion," Sakthivel said.
FIEO yesterday said there was no "serious consideration" for exporters in the measures announced by the government last week.
The target for the current fiscal is $200 billion while exports totalled about $160 billion in 2007-08.
Europe and North America, which account for 37 per cent of India's merchandise exports, are reeling under recession and slowdown.
The FIEO chief said he did not see positive trends before the fourth quarter of the calendar 2009, "though a complete U-turn may take a little longer", he said.
Agencies
"There will be 10 million job losses by March," Federation of Indian Export Organisations (FIEO) President A Sakthivel told reporters here on Tuesday.
Indian exports, which account for just about 20 per cent of the country's Gross Domestic Product, are a highly labour-intensive activity, employing 150 million people.
The country's exports, which posted a robust 30.9 per cent growth rate in the first half of fiscal, contracted by 12.1 per cent in October, for the first time in the last five years. The negative trend continued in November, when exports fell to $11.5 billion from $12.7 billion. The data for December are yet to be released.
"I can safely say that negative growth trends will continue in December and in the next couple of months... I hope we will end the fiscal with exports of about $175-180 billion," Sakthivel said.
FIEO yesterday said there was no "serious consideration" for exporters in the measures announced by the government last week.
The target for the current fiscal is $200 billion while exports totalled about $160 billion in 2007-08.
Europe and North America, which account for 37 per cent of India's merchandise exports, are reeling under recession and slowdown.
The FIEO chief said he did not see positive trends before the fourth quarter of the calendar 2009, "though a complete U-turn may take a little longer", he said.
Agencies
Logitech to cut 15 percent salaried staff
Logitech International SA, a maker of mice, webcams and other computer peripherals, said it is cutting its salaried work force by 15 percent in response to weak consumer demand amid what it expects to be an extended global downturn.
Switzerland-based Logitech, which also has offices in Fremont, has about 3,500 salaried employees in a total work force of about 9,000.
The company also withdrew its previous fiscal 2009 forecasts for sales growth of 6 to 8 per cent and operating income growth of 3 to 5 per cent. It did not provide revised targets and said it plans to update investors on its outlook during its third-quarter results briefing on Jan 20.
"During the December quarter, the retail environment deteriorated significantly," said Gerald P Quindlen, Logitech's president and chief executive officer. He added in a statement that "we expect the economic environment to worsen in the coming months and we are therefore taking significant actions to align our cost structure with what is likely to be an extended downturn."
Logitech said it will book a restructuring charge for the job cuts in its fiscal fourth quarter. It said it will detail the charge when it issues its third-quarter results.
Quindlen said the company has a strong cash position, no debt, and is maintaining market share.
Agencies
Switzerland-based Logitech, which also has offices in Fremont, has about 3,500 salaried employees in a total work force of about 9,000.
The company also withdrew its previous fiscal 2009 forecasts for sales growth of 6 to 8 per cent and operating income growth of 3 to 5 per cent. It did not provide revised targets and said it plans to update investors on its outlook during its third-quarter results briefing on Jan 20.
"During the December quarter, the retail environment deteriorated significantly," said Gerald P Quindlen, Logitech's president and chief executive officer. He added in a statement that "we expect the economic environment to worsen in the coming months and we are therefore taking significant actions to align our cost structure with what is likely to be an extended downturn."
Logitech said it will book a restructuring charge for the job cuts in its fiscal fourth quarter. It said it will detail the charge when it issues its third-quarter results.
Quindlen said the company has a strong cash position, no debt, and is maintaining market share.
Agencies
Monday, January 5, 2009
Infosys, Wipro get terror e-mails
Six prominent IT companies in the city, including Infosys and Wipro, have received e-mails threatening to blow up their buildings, said a top police officer.
Joint commissioner of police B. Gopal Hosur said here that the companies received e-mails threatening to blow up their establishments two days ago and immediately informed the police.
The police have already begun investigations, he said, but did not divulge further details.
Security had been tightened at all the Information Technology companies which received the threats.
City police commissioner Sankar Bidri said police viewed the e-mail threats seriously and that all precautionary measures were being taken.
Joint commissioner of police B. Gopal Hosur said here that the companies received e-mails threatening to blow up their establishments two days ago and immediately informed the police.
The police have already begun investigations, he said, but did not divulge further details.
Security had been tightened at all the Information Technology companies which received the threats.
City police commissioner Sankar Bidri said police viewed the e-mail threats seriously and that all precautionary measures were being taken.
India to emerge strong from the global meltdown
The report said India, along with China, Russia and South Korea would emerge stronger from the global financial crisis as they enjoy strong economic foundations, higher growth rates and sound monetary policy measures.
US, China and Japan were ranked first, second and third respectively.
India ranked 19th in terms of budget balance as a percentage of the gross domestic product (GDP) and 12th in terms of public debt as a percentage of the GDP.
The ranking was based on seven economic indicators: size of the economy, spending power, tax structure, interest rate policy, budget balances, debt burden and foreign exchange reserves.
US, China and Japan were ranked first, second and third respectively.
India ranked 19th in terms of budget balance as a percentage of the gross domestic product (GDP) and 12th in terms of public debt as a percentage of the GDP.
The ranking was based on seven economic indicators: size of the economy, spending power, tax structure, interest rate policy, budget balances, debt burden and foreign exchange reserves.
Sunday, January 4, 2009
Will US debt increase by $2 trillion in 2009?
The US national debt is expected to jump by as much as $2 trillion this year, thus putting more pressure on the American economy, a leading daily here said.
At present, the country's debt stands at nearly $10.7 trillion. Of this $3 trillion is held by foreign investors , with China ($652.9 billion) and Japan ($585.5 billion) being the top two creditors.
The soaring national debt would saddle taxpayers with huge new interest payments for years to come, the Washington Post said.
"Some analysts also worry that foreign investors, the largest United States creditors, may prove unable to absorb the skyrocketing debt, undermining confidence in the US as the bedrock of the global financial system," the Post wrote.
The newspaper said economists from across the political spectrum have endorsed the idea of going deeper into debt to combat the worst ever economic crisis since great depression of last century.
They argue that even with an increase of $2 trillion national debt, the United States is in relatively good financial shape as compared to other industrial nations.
Japan's public debt equalled 182% of its GDP in 2007 and that of Germany was 65%, the newspaper said referring to a forthcoming report by Scott Lilly, a senior fellow at the Centre for American Progress.
Even a $2 trillion increase would push the US debt to about 53 of the overall economy. This is "only a few percentage points above where it was in the early 1990s," Lilly was quoted as saying by the newspaper.
Source: Agencies
At present, the country's debt stands at nearly $10.7 trillion. Of this $3 trillion is held by foreign investors , with China ($652.9 billion) and Japan ($585.5 billion) being the top two creditors.
The soaring national debt would saddle taxpayers with huge new interest payments for years to come, the Washington Post said.
"Some analysts also worry that foreign investors, the largest United States creditors, may prove unable to absorb the skyrocketing debt, undermining confidence in the US as the bedrock of the global financial system," the Post wrote.
The newspaper said economists from across the political spectrum have endorsed the idea of going deeper into debt to combat the worst ever economic crisis since great depression of last century.
They argue that even with an increase of $2 trillion national debt, the United States is in relatively good financial shape as compared to other industrial nations.
Japan's public debt equalled 182% of its GDP in 2007 and that of Germany was 65%, the newspaper said referring to a forthcoming report by Scott Lilly, a senior fellow at the Centre for American Progress.
Even a $2 trillion increase would push the US debt to about 53 of the overall economy. This is "only a few percentage points above where it was in the early 1990s," Lilly was quoted as saying by the newspaper.
Source: Agencies
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