Satyam computer Net seen doubling, outlook bright

Anshuman Daga

BANGALORE: Satyam Computer Services, India's fourth-largest software

exporter, is expected to report on Tuesday that its profit doubled the past year

and to reassure investors its prospects remain bright.

A Reuters poll issued on Monday of 12 analysts showed Satyam's net profit for

the January-March quarter likely surged 102 per cent from a year-earlier to Rs

838.62 million ($18 million), on sales of Rs 3.53 billion, up 72 per cent.

Hyderabad-based Satyam is the first major Indian infotech company to post

results for the past quarter and the financial year ended in March. It is

expected to post its results after market hours on Tuesday.

Looking ahead, analysts said the company's wide client base and its low

exposure to dotcom firms and the troubled global telecom sector should help it

weather the downturn in the US economy, its top market.

"Satyam is at the low-end of the pricing spectrum among the leading

software exporters and this could also help it increase business," said one

analyst at a US brokerage. Satyam, with its 8,100 staff, makes software used by

over 150 Fortune 1000 companies, including General Electric; it's top client,

and Sony Corp.

For the full year, Satyam's net profit is forecast to jump 114 per cent to

2.89 billion, on sales of 12.11 billion rupees, up 78 per cent. Satyam's shares

have fallen 27 per cent in calendar 2001 and 70 per cent over one year. The

Bombay Stock Exchange's main IT index has sunk about 44 per cent this year and

74 per cent in the past 12 months.

Most of the analysts contacted by Reuters expect Satyam's stock to be among

the top performers in the medium-term due to the company's strong growth

prospects and its current valuation. Analysts said they will be closely tracking

Satyam's plans for its money-losing subsidiaries. On Sunday, Satyam sacked the

chief executive of its US-based subsidiary VisionCompass Inc and layed off 40

employees.

It said this would help cut VisionCompass' monthly operating costs by 70 per

cent and was not linked to the tech sector's woes.

Strong growth in clients



Analysts expect Satyam to maintain the pace of new client additions in the
October-December quarter, when it added 24 clients. It presently has over 300

clients. As 60 per cent of Satyam's business comes from clients it has worked

with for over three years, management is confident revenue will continue to grow

in the near term, analysts said.

Analysts expect Satyam to boost business from Ford Motor Co, a long-time

client, and chemical giant DuPont. During a visit to Satyam's headquarters last

month, DuPont's top officials said they were considering sourcing more

information technology from Satyam, which has been working on e-commerce and

other projects for DuPont the past two years.

(C) Reuters Limited 2001.