Brief

Satyam posts strong results; announces NITOR acquisition and Fujitsu Deal

Ramalingam Raju

Satyam Computer Services Limited posted a Q2 profit increase of 27.9% over last year in spite of fears over appreciation of the rupee and the resultant drop in margins. Satyam reported operating margins at 17.72% down from 18.78% for the same quarter last year. The net income as per US GAAP was $101.90 million for this second quarter. BFSI continued to be the primary revenue earner contributing 28.59% of total revenue. It was followed by manufacturing and TIMES (Telecom, Infrastructure, Media, Entertainment, Semiconductor) at 26.69% and 20.36% respectively. The company also added around 37 new customers this quarter which include 8 Fortune Global and US 500 corporations.

Satyam has also entered into definitive agreements to acquire the UK based NITOR Global solutions. NITOR is a significant European player in the Infrastructure Management Services space providing end-to-end solution implementation and program/project management. Under the all-cash transaction worth $5.5 million, NITOR will be merged with Satyam’s IMS Group.

The deal is the second acquisition by Satyam in Europe pointing towards the continuing thrust by Indian Software companies into the European market. The growing importance of the European markets is being seen as an alternative to the US on which most Indian Software players are overtly dependent. Ramalingam Raju, CEO Satyam, hinted at the same pointing out that

Asia Pacific was also on his group’s radar and gaining in importance. For this quarter, the Americas contributed around 66% as compared to 18% by Europe.

Apart from the NITOR Acquisition, Satyam has also signed a multi-year deal with Fujitsu Services to provide global outsourcing services to Reuters. The deal is part of a ten year, $1 billion internal information systems transformation program. Under the 10-year contract, Satyam will be extending its support and development of a large number of core applications, as well as providing managed infrastructure services for desk side support, a Global Network Operations Center and Remote Infrastructure Management. The provision of support and services will be extended across 17,500 Reuters employees based in over 100 countries.

Satyam has already been a service provider delivering key services to Reuters over the past six years. This new contract means that Satyam will be providing the new services through Fujitsu rather than directly. This deal hints at Satyam’s growing interest in media services.

Satyam also announced that its BPO arm, Nipuna Services Limited will change its name to Satyam BPO Limited. Raju has pointed towards the decision to buyout external stakeholders as the reason for this change. In the Chairman’s message he states, “Customers are today much more positively inclined about receiving the entire value chain of services from a single organization and in that context, this move would be in line with market demand.”