Satyam: Why We're Terminating Coverage

Investment Conclusion. We are discontinuing coverage of Satyam (SAY) with a Sell rating. On January 7, we downgraded our rating (to Sell) and suspended our estimates/target. SAY no longer meets our coverage parameters. It is our belief that investor attention and our own efforts are better applied elsewhere.

Given the ongoing liquidity crisis, drawn out financial restatement process, material litigation exposure, despondent employee morale, damaged brand and looming client disengagements – it appears that mere survival will rest on the ability of management to engineer a quick sale or cash infusion on distressed terms. In the absence of such an outcome, the ADSs could be virtually worthless, e.g., we note that even an overcapitalized, profitable and untainted player like Patni (PTI) has an enterprise value that translates into <10% of calendar 2009E revenue and <1.0x EBITDA.

Disclosure: I, Ashish Thadhani, certify that all the views expressed in this research report accurately reflect my personal views of the subject companies. I certify that I have not and will not receive compensation with respect to the issuance of this report.