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Satyam Surges on Nasdaq Despite Reporting $1.8 Million Loss

Although India's first pure Internet stock, Satyam Infoway, hit an all-time high for two consecutive sessions on the Nasdaq, it reported a net loss of $1.8 million (Rupees 7.69 crores) for the second quarter.

Shares of Satyam (SIFY), India's largest private ISP, touched a new high of $57.5 before closing at $52 on Friday. This means that the market cap of SIFY crossed $1 billion.

In heavy trading, the SIFY counter clocked a volume of 1.5 million shares. However, the rise in the ADS price reflected the general rise of technology stocks, which continued to soar on the bourses due to fund buying.

The net loss of Rs 7.69 crore ($1.8 million) during the second quarter compared to a Rs. 4.42 crore ($1.02 million) loss recorded in the corresponding quarter of the previous year.

The company's revenues grew by 616 per cent during the second quarter compared with the corresponding previous year. Total revenue for the second quarter of the current fiscal were Rs 12.74 crore ($2.9 million) compared with Rs 1.78 cr ($0.41 million) in the corresponding quarter of the previous year.

The company's Internet access revenues continued to grow and accounted for Rs 7.09 crore ($1.65 million), representing 55.6 per cent of the total sales of the company in the second quarter. Company sources said it had about 87,000 consumer-level Internet subscribers at the end of September. The firm reached 100,000 customers on November 11.

SIFY's network currently serves 28 cities throughout India, with many more cities due to be wired soon.

The second results do not include the results of the company's initial public offering (IPO) which was completed in October. The IPO resulted in net proceeds of approximately $80.4 million, net of underwriting discounts and offering expenses. The proceeds from the IPO are intended to fund network infrastructure expansion and develop content for Satyam Online's portal business, as well as advertising and promotion of the brand.

Market analysts feel that Satyam is likely to face stiff competition from state-controlled Videsh Sanchar Nigam Limited, the largest ISP in India, and other major private players like MantraOnline, Dishnet who are also aiming to reach the top private ISP slot in India.