India and IT
Satyam is an Indian based IT company that offers a variety of services from application development and maintenance to infrastructure management. India is a growing market and will add millions of internet and IT users within the next few years. The opportunity for tech companies in India is immense.
Last year The Times of India claimed that:
Google's chief executive Eric Schmidt has predicted that India and not China will become the worlds biggest Internet market in "about five or ten years from now, based on current trends."
And what's more, Schmidt's other futurist view is that Hindi, not Hispanic, could become one of the world's three Internet languages, in conjunction with English and Chinese.
Internet and IT are certainly related, and the bigger the internet industry gets, the more support and development will be needed on the IT side. The potential for growth with such companies is impressive. To read more on the untapped internet market in India, see our article on Rediff.com (REDF) and Sify Limited (SIFY) Takeover Rumors.
SAY As a Target
With a market cap of $7.13B and assets of only $1.5B, a Leveraged Buyout would be less than probable. However, it could still be a possibility, as rumors have circulated that SAY has added contracts worth up to $2B in revenues for the next year (see recent news from myiris on SAY). The free cash flow of the company has not been spectacular in the past. With the possible added $2B in revenues, however, the FCF could be substantially higher and could make SAY an attractive Indian company with lots of potential for growth.
IBM As an Acquirer
In the recent takeover rumors, IBM has been mentioned as the possible acquirer. With a market cap of $142B and with $45B in the bank, an acquisition of a company, say the size of SAY, wouldn't be extremely difficult.
IBM itself provides business consulting and IT services similar to what SAY does (See the Indian IBM site). IBM has been present in India since 1992. IBM's site states explicitly:
India is an important market for IBM and the company has been making significant investments from time to time.
It then later states:
IBM shares the belief that India can unleash its true potential only through making IT available to and usable for large numbers of people.
Are these statements perhaps a foreshadowing of such an acquisition?
An acquisition of SAY by IBM would increase IBM's current IT market share in India substantially. Getting into the growing markets at key times is extremely important for IT companies. While it is true that the market for SAY's products and services is global, they have a keen understanding of the Indian marketplace, and will be ever more able to capitalize on it as the market is forthcoming.
Conclusion
As we at StockRumors.com feel about most Indian and Chinese IT and internet companies, there is a lot of growth ahead for SAY . The companies that can capitalize on the future growth of these two nations that control more than a quarter of the world's population will become the giants of the future.
Domestic companies that realize this now and take advantage of this will have significant advantage in the future.
Growing companies such as SAY are always becoming more attractive as takeover targets.
