Satyam - Going down or coming Up

With latest two blow to Satyam, it is expected that company would go down and so much that it may be hard to recover. If you don't know about these two blows, here are the details for you -
First Blow - Satyam decided to invest in real state companies to diversify and to de-risk company asset. Unfortunately these real state companies, Maytas Infrastructure and Maytas Properties, were owned by family member of its main promoter Raju and were not doing very good in market.

Second Blow - World bank posed a 8 year ban on Satyam. Ban was meted out for "improper benefits to bank staff" and "lack of documentation on invoices".

Satyam share plunged down to 50% after these. 4 of its director resigned, few taking moral responsibility of supporting its decision and its board of director strength reduced to 6. It actually worked positively for Satyam as few of wrong doers were going away. Even chances of somebody buying Satyam rose and so the share price of company.

Satyam has engaged DSP Merrill for analysing company's strategic move at this time and have promised stakeholders that all concerns for last two week incidents will be addressed in maltiple ways.

Even it announced that share of few of directors will come in market as those share have been financed by various lenders and so lender will sell those shares to cover margin. It will reduce stake of directors in company and a new identity could take over management if bought a good proportion from market. Thinking that new identity will be more desciplined then current directors, it has given company a better future possibility.

Satyam was surely a grwoing company and was having a strong place in IT service provider companies. If management really cares about company and proper corporate governance are put in place, it is no doubt that it will not only recover its position but also reach new levels. What do you think?

US-China friction on Recession Policies

Recession is here and is confirmed by many economy experts. Now two world leaders, US and China, will try to do everything to save their country and minimize the impact on their country. But can they do it without crossing path of other side?

Obama have made a $850 billion plan to bail out US economy from this recession. From where this money will come? China is largest buyer of Treasury Securities, so surely US need to work with China for pulling this money out of US Treasury. Basically as China hold major US dollar, US will take loan from China for arranging this money.

And, Money doesn't come free, boviously it's money. China will like to have some advantage in terms of increasing its export to US and tax relaxation. But that would be just against US bailout plan. This move will actually go against stablizing it's doemstic market and current bailout plan might fire back if this is the case.

Making the situation worse, what could happen if China dumps its major Treasuries in US to arrange money for its own use? It is difficult for US to give a good return and so it makes sense to invest elsewhere where China could see a better advantage..may be a gonid down Us company??

US can't let it happen and would plan something to stop China from doing all this which won't make China happy. All this could create tension between two World Leader country and who knows, what it has in store for result... Keep watching..

Note: Let me know what you think on this topic. Please leave comment to discuss on this.

Leaders of Tomorrow - No job cut

Seems like a labour cost cutting is much more appreciated then a job cut over the world. In that sense what Infosys is doing is very much impressive. Below is one example of what other companies are following - "Dell (extended unpaid holiday), Cisco (four-day year-end shutdown), Motorola (salary cuts), Nevada casinos (four-day workweek), Honda (voluntary unpaid vacation time) and The Seattle Times (plans to save $1 million with a week of unpaid furlough for 500 workers). " (for full story, read http://www.nytimes.com/2008/12/22/business/22layoffs.html?_r=1)

Everyone is trying to survive in this recession time, but leaders will be those who survive with pride and honour. They would be first in race of progress when it is over.

Share your views on what do your think about these moves by companies. What would you suggest if you don't like it.