Business | Markets
Satyam shares soar on rescue hopes
Shares in Satyam Computer Services jumped as much as two-thirds yesterday on expectations a government-appointed board will rescue the company in the wake of India's biggest corporate scandal.
- Reuters
- Published: 10:06 January 12, 2009
Hyderabad: Shares in Satyam Computer Services jumped as much as two-thirds yesterday on expectations a government-appointed board will rescue the company in the wake of India's biggest corporate scandal.
The board is meeting at Satyam headquarters in the southern city of Hyderabad to lay out a roadmap for a firm battling for survival after its former chairman quit last week and confessed that profits had been falsified for years.
Indian shares and the rupee currency were hit as investors worried about the damage to foreign investment in Asia's third-largest economy and the once-booming outsourcing sector, a magnet for thousands of young job seekers.
"I think they [the board] will look at providing stability to employees and clients first. What they have to see in the next three months is that Satyam is still not bleeding," said Avinash Vashistha, chief executive at consultancy Tholons.
"Also, we have to see if the government will extend some monetary support to Satyam to take care of salaries and all."
By 08.40 GMT, shares in Satyam, which counts Nestle and General Electric among its clients, were up 40 per cent after plunging 94 per cent in the past two trading sessions. The stock had risen as much as 68 per cent earlier yesterday.
Satyam, which specialises in business software, has seen its market value dive to about $450 million (Dh1,652.89 million) from more than $7 billion just six months ago.
The fraud has dented hopes of thousands of graduates who said they had been promised jobs by Satyam, which was formed two decades ago and was viewed as being among the pioneers in India's software services industry.
"It's not only about the future of 53,000 employees, it's about me, my friends and 5,000-6,000 of us who have got offer letters but are yet to be inducted into the Satyam family," said Anji Reddy, an engineering graduate from Hyderabad's prestigious Jawaharlal Nehru Technology University.
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