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India’s Satyam Computer Services Ltd. on Monday announced both a net loss and vastly improved operating margins, leading its chairman, Vineet Nayyar, and CEO, C.P. Gurnani, to describe the company in very divergent terms.

Noah Seelam/Agence France-Presse/Getty Images
Satyam on Monday posted fiscal fourth-quarter earnings. Above, Vineet Nayyar, left, and C.P. Gurnani during a press conference in Hyderabad.

The software exporter, which has been recovering from a massive accounting scandal that came to light in early 2009, on Monday posted fiscal fourth-quarter earnings that showed it was badly hurt by the roughly $126 million payout it agreed to in February in order to settle a class-action lawsuit by investors in the United States who sought damages as a result of the fraud.
The one-time charge of led to a net loss of 3.27 billion rupees (about $73 million) for the period. In the preceding quarter, from October to December, it had posted a net profit.
Perhaps because of this relapse, Mr. Nayyar compared the company to a patient that was slowly coming off life support and wasn’t ready for a major exertion like a marathon yet.
And yet, over the same period, the company also saw a near doubling of its operating margins to 13%.
Its 7.5% growth in revenue from the preceding three months to 13.75 billion rupees compared well against industry leaders Tata Consultancy Services Ltd., which posted revenue growth of 5.1% in the same quarter, and Infosys Technologies Ltd.’s, which saw revenue grow 2%. Satyam’s revenues beat the average of estimates in a Dow Jones poll of seven analysts of 13.16 billion rupees.
And if it hadn’t had the one-time charge, it would have posted net profit of 2.34 billion rupees, an increase of 25% from the preceding quarter (year earlier comparisons aren’t available because the company didn’t post results for several quarters as it worked on restating results after former chairman Ramalinga Raju disclosed the fraud). So the company CEO took a decidedly different view of things than Mr. Nayyar.
“I don’t feel like a patient and I think we’re probably ready for the marathon,” said Mr. Gurnani.
Analysts appeared impressed by the margins stated in Monday’s earnings.
“The results were above expectations. While revenues came in above expectations, the improvement in margins surprised us,” said Dipen Shah, senior vice president, Kotak Securities.
But investors weren’t convinced. Satyam shares closed down 4.2% at 73.55 rupees in a weak Mumbai market. The benchmark Sensex closed 1.8% lower.
Kotak’s Mr. Shah said investors sold the stock because it was presently overvalued compared to its peers, having risen in recent months on expectations of a strong financial performance in the fourth quarter. The stock had risen more than 41% from the 52-week low of 54.40 rupees ($1.21) that it touched in mid-February.

Via: India Real Time