Did not want to jump in and comment with all the noise. However, there seems to be a MAJOR point missing in all that I've read - MARKET EXPECTATIONS
If one reads Raju's letter carefully, there seems to be an invisible struggle within the "Mea Culpa" tone that is saying - I did what was expected of me by the market ? Is this true ?
I've sat through a number of earnings calls / shareholders meetings (Disclosure : I own shares in quite a few IT companies - but, never had SATYAM) where the analysts are always asking just a common set of questions. These being
- What has been your revenue growth and what will be your revenue growth ?
- What has been your margin % and growth ?
These questions themselves are fine - however, the expectation of benchmark is that revenue will grow at almost 100% Y-O-Y and margin will always be upwards of 40% !!
These are not sustainable in the long run and are unrealistic benchmarks.
As long as the expectations of analysts and market watchers are not "reasonable" expect the response to it to be correspondingly "un-reasonable"
The market has to realize that 30% revenue growth, 15-30 % margins are all "GOOD" and "REASONABLE" in a growth market and these are sustainable values that show good governance.
Is it the expectation / is it mandatory to have 40% + margins to tell the market that you have a well run company ?
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