Goldman Slaps Software Stocks....

Here is a quote from the report:

"The worst of the IT-spending slowdown likely remains in front of us, as we start the clock on slashed 2009 budgets. We forecast 0 percent revenue growth for our group, below consensus at 5 percent, and 1 percent earnings growth, below Street at 2 percent."

Goldman presents a recommended list of big-name IT software stocks that they consider to be "safe" choices in the current environment. Microsoft (MSFT) and Oracle (ORCL) are on the list, as well as companies that suggest "strong cost-cutting discipline and mission-critical product sets" like BMC (BMC), CA (CA), and Symantec (SYMC). BMC and CA are big in system management and support functions while Symantec is, of course, focused on system and information security. The needs for these kinds of functionality doesn't go away.

There has been much discussion in the blogosphere about open source software and how it will see a surge of adoption do to its lower cost. Goldman quite rightly says this will not be the case. I have written that CIOs will hunker down and stick with the tried and true (which is not open source in most large-sized enterprises) and Goldman is in agreement, seeing a consolidation of functionality with big, established vendors and a moving away from the concept of seeking best-of-breed point solutions regardless of vendor.

Surprisingly, Goldman doesn't expect Salesforce.com (CRM) to prosper particularly in the current environment. Goldman doesn't see Salesforce as one of the heavyweights who will benefit from the "consolidation" mentioned previously. On this point, I would disagree. Salesforce.com and SAAS in general allows certain IT functions to be brought online with lower initial cost and that should remain an attractive proposition going forward no matter what the economic environment. Of course, it is always cheapest to do nothing and some enterprises will do exactly that, so Salesforce.com will not escape this downturn altogether.

So in terms of non-defense technology companies we are batting two for two: neither hardware not software will be spared over the next several quarters as the outlook remains dim for both.

From News Source.

Latest News on Satyam Computers

US Auditors missed Satyam Fraud. The Public Company Accounting Oversight Board (PCAOB), which was set up by the US Securities and Exchange Commission to oversee auditors in the wake of the Enron and WorldCom scandals, visited India for the first time last year and conducted a review of the auditing processes of several international accounting firms that audit US-listed Indian firms.

Satyam employees have set themselves a deadline, January 31, whether to stay with the IT major or switch jobs. Incidentally, the date also coincides with many multinational corporations (MNCs) unveiling their new projects and recruitment drives for the next fiscal.

US-based employees of the embattled Satyam Computer Services have been asked to return their credit cards by an American financial institution. Employees, who are still coming to terms with the uncertainty about the firm’s fate, have also found that their medical insurance is no longer valid.

Speculation is rife that the government is considering a package of up to Rs 2,000 crore to bailout the crisis-ridden Satyam Computer but no confirmation could be obtained.

The government has sounded out the former chief of software industry body NASSCOM Kiran Karnik among other luminaries to join the board of Satyam.

The government will not appoint executives of Satyam's rivals such as Infosys, TCS or Wipro or anyone directly in the IT industry to this board because of concerns about conflict of interest. Appointment of a new board was seen a key to restore confidence in the company, and by extension to the rest of India's IT sector.

Ramalinga Raju and his brother Rama Raju have been arrested

Ramalinga Raju, Satyam founder surrendered himself to the police in the night. News was coming out that he will be arrested.

B Ramalinga Raju tonight surrendered before the Director General of Andhra Pradesh Police S S P Yadav, a police spokesperson said.

"I am prepared to subject myself to the laws of the land and face the consequences thereof" Raju had said in a confessional statement.

Raju, whose whereabouts were a matter of speculation ever since he made the startling disclosure on Wednesday about the Rs 7,800 crore financial fraud, had been in hiding and was summoned to appear before the SEBI tomorrow.

According to TV reports, Satyam CFO Srinivas Vadlamani would also be arrested by AP police on Saturday.

CBCID will produce Raju in court within 24 hrs.

Future of Employees of Satyam.

Future of employees in Satyam company is not same as what happened in US. Indian government and mostly Andhra Pradesh government is backing employees and definetely employees will be protected as state and central elections are around the corner.

Inside news is that a high ranking political minister has given the word that employees won't be facing the worst as expected. It seems Government is going to take over the company. Existing board is dissolved and 10 new directors would be appointed.

There is lot of sympathy shown by employees on Raju.

How The Fraud of Satyam Began

Satyam (Sanskrit for 'truth') Computer Services Ltd. was founded by B.Ramalinga Raju in 1987. The company offers information technology (IT) services spanning various sectors, and is listed on the New York Stock Exchange and Euronext.

Satyam's network covers 67 countries across six continents. The company employs 52,000 IT professionals across development centers in India, the United States, the United Kingdom, the United Arab Emirates, Canada, Hungary, Singapore, Malaysia, China, Japan, Egypt and Australia. It serves over 654 global companies, 185 of which are Fortune 500 corporations. Satyam has strategic technology and marketing alliances with over 50 companies. Apart from Hyderabad, it has development centers in India at Bangalore, Chennai, Pune, Mumbai, Nagpur, Delhi, Kolkata, Bhubaneswar, and Visakhapatnam.

According to Wikipedia , Mr.Raju stated that:

"What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualised revenue run rate of Rs 11,276 crore in the September quarter of 2008 and official reserves of Rs 8,392 crore). As the promoters held a small percentage of equity, the concern was that poor performance would result in a takeover, thereby exposing the gap. The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. It was like riding a tiger, not knowing how to get off without being eaten.”

In the fiscal year to March 2008, Satyam reported a 46.3 per cent rise in revenue to $2.1 billion under the US accounting standards, while net income rose 39.7 per cent to $417 million.

In October, it said revenue in this fiscal year ending in March 2009 will rise 19-21 percent to $2.55-$2.59 billion. Earlier the company said that it plans to expand its presence in Europe, Asia-Pacific and the Middle East to cut its dependence on the United States.

The news of Satyam acquiring Maytas Infrastructure for $1.6 billion (Rs 7658-crore) sent shockwaves across the country,Many questioned the things behind the deal. There was heavy pressure by share holders and lots of criticisn over governance issues,by this satyam has withdrawn the Offer with in hours of the making of the proposal.But by the time damage was done. The scrip lost over 30 per cent in India.

There was a quick change in plan after investors shown their opposition to the deals by pushing shares in India's No. 4 software services company down 55 per cent in New York Stock Exchange trade. Satyam founder and Chairman B Ramalinga Raju and other insiders hold 36 per cent in Maytas Infra and 35 per cent in Maytas Properties.

Analysts questioned the motives of Satyam's top executives, saying there was a potential conflict of interest because they hold stakes in both companies.

Also questions raised in the minds of analysists like when the market is down and companies are saving their cash to help weather the global economic slowdown , satyam goin for huge aquisision.Ramalinga Raju originally said the deal by saying it would "de-risk" Satyam's core business in IT services.Then immediately came a severe blow to the Hyderabad-based IT provider facing flak from investors on its decision to acquire Maytas' was World Bank banning it for 8 years.

The World Bank has banned Satyam from providing it services for eight years for alleged malpractices, including bribery.The ban will severely impact the business prospects of the Hyderabad-based company, already battling to retain and attract fresh business in a recession-hit global market.

The World Bank debarment has been meted out for "improper benefits to bank staff" and "lack of documentation on invoices.” World Bank information security chief Robert Van Pulley admitted to the ban during a recent meeting with the officials of Government Accountability Project (GAP), a whistleblower protection organisation in the US. The bank has handed over the case to the US Justice Department and the Treasury Department.

Satyam started providing IT services to the World Bank in 2003. Two years later, allegations of bribery surfaced. In 2007, an internal World Bank investigation found that former VP Mohamed Muhsin had secured contracts and purchase orders worth $100 million for the Indian firm in return for Satyam's stock options (ADRs) at preferential prices. After which Muhsin was banned permanently from the bank. However, Satyam was allowed to work for the bank till 2008.

There have also been allegations against Satyam of causing security breaches at the bank. World Bank's records, which contain sensitive financial information, have reportedly been illegally accessed over the last year.

Now the question is , is it really a fraud or a mistake which brought them here or Wrong step taken by satyam like aquiring maytas as if it has been succeeded nobody might have known this.

Raju said

"It was like riding a tiger, not knowing when to get off without being eaten," Mr Raju said, describing how the fraud, which he claimed had begun as an effort to smooth over a minor accounting discrepancy, had "attained unmanageable proportions as the size of the company operations grew".

According to Raju this was done few years back in order to smoothen small accounting difference which means like it was done intentionally to a small extent but as the company was growing it was also growing at a rapid pace.

Now from past few years satyam haven't faced huge loss , share holders were in profit and investers were also in profit as the company was globalizing at a rapid pace.It made Indian software giant on the global market. Other companies have gained up their business looking at the pace of satyam which resulted in the development of IT.

Satyam was trying to cut down the dependencies on the US market which is good for India.There was lot of employeement given by satyam. I agree this is a FRUAD which effects investers.But please comment on this, like they have done unethical business , but what do we say for their achievements of satyam for we people.what should have been done by satyam, do they have said this issue 7 years back when they are gaining the name in the market or what else could have been done in order to save our Indian IT Giant
SATYAM.

WHAT WOULD BE THE FUTURE OF SATYAM?????

Dollar is still Strong.....

The great challenge confronting the foreign exchange market at the start of 2009 is finding a good alternative to the US dollar. One of the ironies of market events during 2008 was that the US financial crisis produced a flight to safety in the dollar. The dollar emerged triumphant from a financial debacle that centred on $1,300bn (€960bn, £890bn) of subprime US mortgage loans. The fallout has triggered a $32,000bn decline in global stock market capitalisation and driven all the Group of Seven leading industrialised countries into recession.

The dollar slumped against the euro during the final weeks of 2008 but fears about the financial system still drove US Treasury yields down to zero on three-month paper and less than 2.1 per cent on 10-year notes. This fear factor is likely to sustain demand for the dollar during the early months of 2009.

There is not now a clear alternative to the dollar because all big economies have slid into recession. Real gross domestic product could contract by 1.5 per cent in both the US and Europe during 2009 and by as much as 2.5 per cent in Japan. The decline in world trade and commodity prices will also reduce significantly the growth rates of the emerging market economies. South Korea and Taiwan are already in severe slumps. The growth rate of China could halve.

Source FT... http://www.ft.com/cms/s/0/5b21dafc-db5a-11dd-be53-000077b07658.html?nclick_check=1

Fed Minutes: Pain & Unemployment Ahead... And Deep Recession

The minutes from the December FOMC meeting where rates were essentially taken to zero have now been released.  What is interesting here is that there is very little expected hope for anything great in 2009.  The FOMC has noted substantially weaker conditions persisting.  This quote pretty much sums it up, although even this minimizes the total commentary:

• "...investors seemed to become more concerned about the likelihood of a deep and prolonged recession."

The economic risks are substantial to the economy despite substantial easing to inflationary pressures.  It also noted that there were some who see inflation as too low, meaning the deflationary worries are there.  The Fed staff now admits that it sees a decline in GDP for 2009 and unemployment will rise significantly into 2010.

If you read through the minutes it reads like a tragedy.  About the only good news in there is that the FOMC noted the commercial paper markets had improved.  They improved because of that government guarantee, otherwise there would not even be that.

Economic Reports for Next Week

Monday: November construction spending is due shortly after the start of trading. Spending is expected to have fallen 1.2% in November after falling 1.2% in the previous month.

Monthly truck and auto sales figures are due throughout the session.

Tuesday: The Institute for Supply Management's survey of the services sector of the economy is due shortly after the start of trade. The December index is expected to have dipped to 37 from 37.3 in November, remaining deep in recessionary territory.

The government's November factory orders report is due around the same time. Orders are expected to have fallen 2.6% after dropping 5.1% in October.

Data on November pending home sales, a leading indicator of housing market activity released by the National Association of Realtors, is due out at 10 a.m. ET. In October, he number of homes under contract to be sold fell by a mere 1% year over year. Analysts had expected pending sales to slip by 3.6%.

Also, the Federal Reserve will release the minutes from its Dec. 15-16 policy-making meeting. At that meeting, the Federal Open Market Committee established a target range for the federal funds rate of 0% to 0.25% and said it would likely keep rates at that level for some time.

Wednesday: The House Financial Services Committee meets to discuss how the next administration might make use of the remaining TARP funds, amid criticism that the $700 billion bailout has not been working.

Also Wednesday, a House panel holds an economic recovery plan hearing that will feature testimony from some of the nation's top economists.

Thursday: The nation's chain stores will be releasing December sales reports, giving investors a better sense of how badly the consumer has been hit amid the recession.

Separately, the Fed is slated to release its monthly consumer credit report at 3 p.m. ET. Consumer credit, a measure of consumer borrowing, for November is forecast to show an increase of $0.5 billion. In October, consumer credit fell by $3.6 billion

Google Chrome Wonderful Tips

Google chrome is a brower with no addon compatibility feature,these bookmarklets will help you have some additional benefits which will be useful to some of them out their.Just make sure you have the bookmark bar enabled on new tabs.Click ctrl+b on your chrome browser and you will have a static bookmarking bar whenever a new tab is opened!

To use this bookmarklet,click on the hyperlink and drag them on to the Chrome Bookmark bar.

Stumble using Chrome

Stumble it - Add this link and click on it whenever you want to Stumble a page you liked. I like this bookmarklet better than the toolbar as it gives me more space.Another way of stumbling a webpage can be found here.

“Gmail This!” bookmarklet

Gmail This - Another very useful feature to mail any page using Gmail. For Google Apps Mail, try this(you will need to replace “yourdomain.com” with your own domain name).

Social Bookmarking submission

Socialize – Submit a blog post from Google chrome to more than 50 social bookmarking website with a few clicks.

Check Google Pagerank

Google Pagerank – Google toolbar was not available for chrome browser,the toolbar has a smart pagerank system,drag this bookmarklet and click on it whenever you want to check the pagerank of any website or blog.

Twitter Updates from Chrome

Twitter now – Drag this bookmarlet to chrome bookmakr bar and whenever you feel like updating your twitter account just click on the bookmark to get a pop up which will let you update the twitter status and check messages.

Tumblr bookmarklet

Tumblelog - Sharing on Tumblr has always been easy, and it still remains on Chrome too.If you own a tumblr blog then this bookmarklet would be helpful.Just Drag this button to your Bookmarks Bar to quickly post to your tumblelog.

Dictionary,thesaurus and reference

Dictionary – One does misses dictionary under your mouse point in Chrome. No more now! Dictionary addon plugin is also here.If you are a thesaurus fan, just drag and drop this (Thesaurus) bookmarklet too on your bookmarks bar.Also you can add a similar bookmarklet for Reference too!

Google translation Chromelet

Translate – Landed on a page that seems Greek to you ? No worry anymore, just click it and see the translation in English. YOu dont even need to know the source language.

Oppurtunities and Change to Look for in 2009

* The U.S. Dollar: By pumping an estimated $3 trillion into the global financial system, the U.S. government is setting the stage for the mother of inflationary conflagrations. According to classic economic theory, the greenback should be in an actual freefall right now – especially in the current low-interest-rate environment, where there’s the potential for still more rate cuts and for additional capital outlays by the U.S. government. And that’s just with the current administration. President-elect Barack Obama has made it clear that if an additional stimulus isn’t announced before he takes office, he’ll make that one of his first official acts. What’s saving the dollar, at least for now, is that there’s so much global uncertainty that the dollar is retaining its reputation as a “safe-haven” currency. And, for now, at least, a safe U.S. dollar trumps inflationary concerns. However, should global investors regain confidence for whatever reason, expect the dollar to decline sharply.

* Oil: Many people are focused on declining oil prices as a function of a perceived slowdown in global demand. We think that’s an erroneous analysis for three key reasons. First, oil is still largely priced and traded in U.S. dollars. That means that as the dollar has risen, oil has become correspondingly cheaper. In other words, much of the price decline we’ve seen can simply be attributed to a rise in purchasing power associated with a stronger dollar. Second, China, India and other newly capitalist (and still-reasonably robust) economies are still increasing their oil consumption at a rate that more than offsets the decline in consumption we’re seeing here in the United States and in other developed markets. And third, Brazil aside, there hasn’t been a major new discovery capable of offset global demand on anything more than a temporary basis for more than 30 years, and most major oil fields are in decline or soon will be. Increasing demand and diminishing supply are clearly bullish influences over the longer term. More immediately, however, a stronger dollar negates this and may well keep oil under $100 a barrel for much of 2009. Obviously a terrorist attack would change the ballgame significantly, meaning we could see a spike to levels exceeding our multi-year target price of $225 a barrel. A year ago at this time, we called for oil to spike well up over $100 a barrel, and touch $150, which it essentially did. Even with recent price declines, some energy-industry insiders are starting to subscribe to our bullish outlook: The Paris-based International Energy Agency (IEA) last week projected that long-term oil prices would reach $200 a barrel (although we think that will happen much sooner than the IEA does).

* Commodities: The story is much the same for commodities, in general, and we expect that longer-term investors will be amply rewarded. More immediately, the popular – though erroneous – assumption that a global slowdown will negate demand is driving prices lower, and may continue to do so for the next six months. Gold will be the most obvious casualty in this arena, as hedge-fund-redemption requests and margin calls continue to mount, which is why we expect the price of the yellow metal to remain lower far longer than most people expect (We’ll focus specifically on gold in an upcoming installment of the “Outlook 2009” series). When it does rebound, however, the returns will be high.

* Global Markets: There’s no doubt that the global markets have taken their share of lumps along with their U.S. counterpart in recent months. But we don’t expect them to suffer forever. Countries with high cash reserves as a percentage of gross domestic product (GDP) – such as China, India and Brazil – are becoming less dependent on the fractured U.S. consumer almost daily, and the economic decoupling we’ve seen developing for several years may really take hold in the New Year. This stands in direct contrast to the situation a decade ago, when the Asian Rim and South America were economic train wrecks and the United States and Europe held all the cash. Companies with significant global exposure to the Asian Region, Latin America and Europe – in that order – remain the best bets for relative safety and growth in 2009.

* Stocks in General: Many investors are questioning the wisdom of being in stocks at all. While we certainly understand the pain that sentiment is based upon – and are hurting, too – it’s important to remember that the last time stocks really performed this badly was during the 1930s. Investors who decided to “get out” entirely then missed the investment opportunity of their lifetime. Don’t make the same mistake. Data shows, unequivocally, that investors who buy when the world is going to hell in a hand basket –think 1932, 1942, 1982 and 2003 – enjoy the largest returns. That’s even true if you’re “early,” and buy ahead of the specific market bottom. However, history also demonstrates that investors who pile in at the market’s peaks – such as 1928, 1969, 1999 and 2007 — tend to incur the worst returns.

* Global Stocks in Particular: Led by cash-rich China, we expect global blue chips to remain the best relative bets for safety, income and appreciation potential in the New Year. We are especially focused on companies involved with infrastructure projects and with firms that derive substantial portions of their revenues from Asian consumers. The first is a no-brainer. According to the latest studies from a variety of sources, planned global infrastructure expenditures in this area exceed $40 trillion by 2030. There is not a bigger, more unstoppable trend on the planet today. If you want proof, notice that a big portion of China’s just-announced half-trillion-dollar stimulus package is devoted to infrastructure projects. Infrastructure companies there will certainly benefit. So will consumer-products firms that are positioned to benefit from the rise of an increasingly Asian consumer base, which boasts significant savings and pent-up demand. Many of the best companies are beaten down to the point that they now feature single-digital Price/Earnings (P/E) ratios – lower than we’ve seen in decades. Some are actually trading for less than cash value, despite a strong history of growth. And the companies we’re studying have solid cash flow – and excellent prospects of maintaining it.