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Satyam beats revenue guidance

By P. Vikram Reddy

HYDERABAD, OCT. 20. In tune with the industry trend, Satyam Computer Services came out with an impressive performance for the second quarter ended September with 41.71 per cent growth in revenues to Rs. 848 crores from Rs. 598 crores. The net profit went up by 28 per cent to Rs. 188.78 crores from Rs. 147.58 crores.

In the process the company beat its revenue guidance of Rs. 810 crores for the quarter, and revised upwards its guidance for full year to Rs. 3,428 crores, from Rs. 3,415 crores. This indicates an annual revenue growth of 34.37 per cent to 34.88 per cent against the earlier forecast of 28.59 per cent to 30.32 per cent. The quarter's sequential revenue growth was 9.93 per cent.

Full year, EPS is expected to be between Rs. 22.61 and Rs. 22.76, a growth of 31.45 per cent to 32.33 per cent. The earlier growth forecast was 26.22 per cent to 28.26 per cent. EPS for the quarter is Rs. 5.95, beating the guidance of Rs. 5.48. The board of directors, which met in the U.S. this time, announced an interim dividend of 100 per cent.

Revised guidance

Interacting with Hyderabad media through videoconference from Satyam's Santa Clara office (U.S.) on Wednesday, B. Ramalinga Raju, Chairman, said this was the fifth straight quarter that Satyam revised its guidance upwards. He was optimistic of the trend continuing saying they "expect business to continue as usual, irrespective of the outcome of the U.S. presidential elections". The worst scenario was one where the U.S. Government could give incentive to encourage local companies to retain jobs. But there is no talk of legislative intervention, which could slow down outsourcing, he said. Also the company was realising higher than average prices.

Keeping in view the growth and expansion plans, guidance for hiring people this year has been revised upwards from 4,000 associates to 4,500-5,000 associates. Offshoring was no longer limited to North America, but was accelerating in the Asia Pacific and Europe, Latin America and South America. To cater to these markets, Satyam's expansion plans cover Hungary and Brazil. Hungary development centre would be added in a few weeks.

Mr. Raju said the growth in the industry was putting pressure for higher remuneration. Effective October 1, Satyam increased remuneration for onsite and offshore staff. This would impact its margins by 100 basis points, but productivity improvement measures would help plug this, he felt.

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