And now we come to the third in our series of earnings reports from the three big names in U.S.-listed services outsourcing to India. We've heard from Infosys
As you may recall from our pre-earnings Foolish Forecast, we're looking at three major issues at Satyam these days: workforce turnover (which increases costs); currency exchange rates (the Indian rupee is appreciating against the U.S. dollar, squeezing Satyam's margins); and how all of this affects forward guidance. Let's tackle those one at a time.
Thank you, sir. May I have another (job)?
As Motley Fool Stock Advisor described in an on-the-ground report on Satyam in June, Satyam has been plagued by high turnover within its workforce, as highly prized Indian software workers and others job-hop from employer to employer in search of ever-increasing compensation. On the one hand, this raises employers' costs as they pay through the nose to attract new talent to replace the old. On the other, they pay again to lavish compensation on those new workers in an effort to cut down on the job-hopping. Employee turnover has gone as high as 15% in recent quarters at Satyam, but efforts to steal employee retention ideas from U.S. rivals such as Accenture
Brother, can you spare a dime (preferably Canadian)?
The Indian rupee continues to appreciate, holding Satyam to just an 11% rise in profits (in rupees) last quarter, despite revenue that was up 12.7% (in USD). Luckily, these numbers are sequential -- something to keep an eye on. As is common in fast-moving industries (I recall that telecom equipment maker Ciena
So far this year, earnings per American Depositary Share (ADS) total $0.29.
Gaze into my crystal ball
Summing up the quarter, Raju made the following propitious statement: "Satyam's early adoption of strategic deals as an area of focus is resulting in larger and longer term engagements. We see this as a sustainable trend." With its intensified focus on landing global clients, Satyam now believes it will pull in $2.07 billion to $2.08 billion in revenue this year, and earnings per ADS of $1.24.
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Fool contributor Rich Smith does not own shares of any company named above. Satyam is a selection of our Stock Advisor newsletter, while Accenture is an Inside Value pick. The Motley Fool has a disclosure policy.