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Satyam Q4 net profit at Rs 116 crore
April 24, 2003 11:01 IST
Satyam Computer Services, India's fourth largest software services exporter, reported a quarterly profit of Rs 116 crore (Rs 1.16 billion) on Thursday.
Total income was Rs 553 crore (Rs 5.53 billion) .
A Reuters poll of 14 brokerages found a median forecast for net profit of Rs 117 crore (Rs 1.17 billion) and for revenue of Rs 540 crore (Rs 5.4 billion).
Analysts had expected the performance to be impacted by sliding profit margins and a strengthening Indian currency.
Satyam, which has 270 clients, was expected to deepen investor worries about a slowdown in sectoral growth after peers Infosys and Wipro posted disappointing earnings and warned of sliding profit margins amid increased competition.
The warnings raised fears that the boom in outsourcing of computing services to India, where wages are lower than in Europe and North America, might be maturing.
Satyam's shares have lost 16 per cent since Infosys shocked the market with a tepid forecast on April 10, after which Bombay's Infotech index has fallen 24 per cent.
The exceptional expense of Rs 152 crore (Rs 1.52 billion) included Rs 126 crore (Rs 1.26 billion) for the loss in value of an investment in Vision Compass Inc, whose operations Satyam has decided to discontinue.
Satyam had an exceptional expense of Rs 40.75 crore (Rs 407.53 million) in the corresponding quarter a year earlier.
Total income in the quarter rose 14.5 per cent to Rs 553 crore (Rs 5.53 billion) from Rs 483 crore (Rs 4.83 billion) a year earlier.
"The write-off is a complete surprise. The management should have at least given some indications," said Gurunath Mudlapur, head of research at Mumbai-based Khandwala Securities.
"The net profit is below my expectation while revenues have matched. This indicates that the pressure on margins has been much greater than expected."
After the results, Satyam's shares dropped more than eight per cent to Rs 139 at the National Stock Exchange, whose benchmark index was marginally up.
Satyam was set up more than a decade ago by chairman Ramalinga Raju, 46. His technology start-up has overwhelmed his family's small textile and construction business with high growth.
Earnings were also hit by a strengthening Indian currency, which gained nearly three per cent against the US dollar in the past year. Most Indian software service exporters earn more than 60 per cent of their revenue from the United States.
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