Satyam Computer dwindled in early trades on Friday as the market expressed dismay over the downward revision in full year earnings by the company.

The scrip of the software major eased 2% to Rs 236.85 on BSE . It hit a low of Rs 235.10, earlier. The scrip of Satyam Computer Services clocked heavy early volumes of 11.9 lakh shares on BSE in just minutes of trading.

On Thursday, it had fallen a solid 6.8% to Rs 242.25 on high volumes of 91.8 lakh shares after the Q3 results were declared.

Domestic funds like UTI and Prudential ICICI were believed to have pressed sales in the stock on Thursday after the disappointing Q3 results.

On Thursday, Say, the Satyam Computer ADR, lost $1.23 or 10% to $10.82 on the New York Stock Exchange following the announcement of Q3 results.

In fact, the results by the company were a clear disappointment. For the third quarter ended 31 December 2002, SCSL posted a 5% sequential rise in sales, but PAT, after adjusting extraordinary items, slipped 1% to Rs 116.74 crore, indicating that margins are under pressure. The performance turned out below analysts' expectations as well as the company's own guidance.

SCSL, itself, had projected income from software services to be between Rs 525 crore (Rs 5.25 billion) and Rs 540 crore (Rs 5.4 billion) and the operating margin to be around 32% for the quarter. The EPS for the quarter was expected to be between Rs 4 and Rs 4.2, garnering a PAT between Rs 125.82 crore (Rs 1.25 billion) and Rs 132.11 crore (Rs 1.32 billion).

The management attributed this dismal performance to lower than anticipated ramp up of revenue from few customers and an expected large deal which was to result in a multi million dollar revenue in each of the quarters being put on hold.

Sales from exports grew 5% sequentially to Rs 517.34 crore (Rs 5.17 billion). Domestic sales witnessed a fall of 22% to Rs 4.93 crore. The increase in top line was a result of a 5.56% increase in volumes marginally reduced by the 0.17% fall in blended billing rates and 0.76% fall in dollar exchange rate.

With the first nine months performance proving below targets , the company has revised its full year guidance downwards. Now, the company expects revenues to be between Rs 2,010 crore (Rs 20.1 billion) and Rs 2,020 crore (Rs 20.2 billion) and operating margin to be around 30.4%. The EPS is expected to be between Rs 14.57 - Rs 14.66, which translates to a PAT of between Rs 458.3 crore (Rs 4.58 billion) and Rs 461.13 crore (Rs 4.61 billion). This will include the Rs 0.46 per share due to profit on sale of stake in Satyam GE Software Services.

Earlier, SCSL had come out with a guidance showing income from software services would grow between 18% and 20% in $ terms for financial year 2002-03. Accordingly, income from software services was expected to be between Rs 2,080 crore (Rs 20.8 billion) and Rs 2,116 crore (Rs 21.16 billion) and the operating margin was expected to be around 32%. The EPS for the year was expected to be between Rs 16.06 and Rs 16.26 , including the Rs 0.46 per share due to profit from sale of Satyam's stake in Satyam GE Software Services. PAT was then expected at Rs 505.17 crore (Rs 5.05 billion) and Rs 511.46 crore (Rs 5.11 billion).

At the current Rs 236.85, SCSL trades at a PE multiple of 16.2 based on its projected FY 2002-03 EPS of Rs 14.57.

BSE Code: 500376