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.