In a seemingly last-ditch effort to save face before its board meeting on January 10, Satyam Computer Services today released a Forrester Research report on its innovation strategy which calls for other organisations to “emulate Satyam by unleashing and harnessing their firms’ grassroots creative energy”.
The report, “Satyam Ignites Innovation from the Bottom Up” is the ninth such paper in the research firm’s series entitled “India: The Innovation Giant (Re) Awakens.” However, it is dated December 18, 2008. A Forrester spokesperson further clarified that the report "was written 4-6 weeks before its published date".
The irony was not lost on investors since the very same research firm Forrester, in a December 30 report on Satyam, had categorically stated that "...Satyam’s management team made a major miscalculation that will likely haunt the company for years..." Satyam had announced, and then quickly canceled after a shareholder revolt, plans to diversify its business and acquire 100 per cent and 51 per cent stakes in real estate and physical infrastructure companies Maytas Properties and Maytas Infra, respectively, for $1.6 billion.
"...It’s looking more and more likely that after the special board of directors meeting on January 10, 2009 (postponed from December 29), there will be management and governance changes and even potentially the outright sale of the company. Sourcing and vendor management executives will need to review their dependence on Satyam and ensure that they have strong contingency plans and change of ownership clauses in the event that Satyam is acquired or the fallout from this serious misstep affects the firm’s ability to compete long term...," indicates the (December 30) Forrester report.
The board meeting's scope has now been expanded beyond buyback to include measures to strengthen Satyam’s governance structure, including increasing the size and altering the composition of the board.
"We believe that the company’s announcement earlier to consider a stock buyback was a knee jerk reaction to the falling stock price and now the company is looking to explore all possible steps required to restore the investor’s faith. Given the likelihood of a further reduction in the promoter stake, we believe that the possibility of a takeover attempt by either a strategic or a financial investor might increase...," Emkay analysts stated in a recent report.
Satyam's stock fell 6 per cent at Rs 166.90 on the Bombay Stock Exchange today.
