Justin du Coeur (jducoeur) wrote,
Justin du Coeur

The Satyam debacle

Don't know how much mainstream press this is getting, but today's interesting business disaster is the Satyam mess.

It's the sort of story that I expect we'll see a lot more of in the coming months: a company that was riding high during the boom, that cooked its books just a *little* bit to make things look better. Then, when things started to go sour last year, they committed what clearly was ever-more-outrageous levels of fraud, to keep anybody from catching on, in a desperate hope that something would go right and they could quietly sweep it under the rug. This built and built, to the point where by now they are more than a billion dollars in the hole. In the end, when the chairman finally had to own up to it (his full letter is enclosed in the article), it brought the company crashing down: their stock is down over 90%, and nobody really expects the company to survive in its current form, despite the fact that a week ago most people would have considered it a great success story.

The moral of the story is, as always, that it's the cover-up that'll kill you. If the letter is to be believed (and given that it confesses to massive fraud, I'm inclined to mostly do so), there would probably have been a moderate but survivable scandal if they'd admitted it when it started. But fudging it forced them to require good luck, and luck was not on their side...
Tags: economy

  • Ideas for fighting Fake News

    [I'm mostly just posting links over in Facebook, but my more technical friends tend to be over here.] Here is a really excellent collection of…

  • Damn

    *Sigh*. I was sure this was possible, and was thinking for the past two weeks that it was starting to feel likely, but was really hoping otherwise. I…

  • Time to change the name of the meme?

    From cnn.com today: 'Trump went on to again attack women who have accused him of sexual assault or misconduct, saying, "every woman lied when they…

  • Post a new comment


    Anonymous comments are disabled in this journal

    default userpic

    Your reply will be screened

    Your IP address will be recorded