Saturday, January 17, 2009

WiMax Loses A Backer As Nortel Pulls Investment (NT)

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WiMax Loses A Backer As Nortel Pulls Investment (NT)
Dan Frommer | June 11, 2008 4:20 PM

cellphone-tower.jpgWiMax, the long-hyped wireless broadband technology, is losing a backer: Nortel (NT) will cut its investment in WiMax to focus on a nascent, rival technology called LTE, which has won the support of the two largest U.S. wireless operators -- AT&T (T) and Verizon Wireless -- and big European carriers. (Nortel will funnel its remaining WiMax business through a partnership with Israeli gearmaker Alvarion.)

What does this mean for Sprint Nextel's (S) WiMax network, which is being spun off into Clearwire (CLWR) -- and has recently attracted billions of dollars of investment from the cable industry, Google (GOOG), and Intel (INTC)?

Not much, in theory: Sprint has its infrastructure suppliers lined up, including Motorola (MOT) and Samsung -- and not Nortel. (One of the reasons that Nortel's departure isn't a surprise.)

But it's not good news for Sprint and its partners. In any format war, you want more allies, not less. Just ask HD DVD backer Toshiba.

See Also:
Time Warner Cable CEO: WiMax Investment 'Defensive', Mobile Video No 'Big Deal'
Alltel Snubs Clearwire: Can Sprint Make WiMax Work By Itself?
Sprint's WiMax Delays Will Make The '4G' Format War Worth Watching

What happened to Nortel?

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mike-zafirovski.jpgTelecom gear maker Nortel's (NT) downward spiral continues: The company filed for Chapter 11 bankruptcy protection in Delaware today. Nortel owes companies more than $3.8 billion, according to court filings, the WSJ notes.

What happened to Nortel? The company hired former Motorola exec Mike Zafirovski more than three years ago to turn things around after a huge accounting and management mess.

But since then, Nortel has fumbled, focusing at different times on wireless equipment, large-scale ethernet buildouts, office phones -- including a high profile partnership with Microsoft (MSFT) that seems to have led nowhere, etc.

More recently, Nortel's telecom carrier customers have cut spending as the economy has soured. And asset sales haven't worked out as planned.

Hat tip to RBC analyst Mark Sue, who predicted the bankruptcy back in November, cutting Nortel's price target to $0. That day, the market sent Nortel shares up 32% to $0.78. But today, investors are bailing on Nortel, sending shares down 77% to $0.07, an all-time low. (Nortel's split-adjusted share prices from 2000 -- more than $800 -- look even more out of place today.)

India shares provisionally rise 3.7pct,Satyam falls

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India shares provisionally rise 3.7pct,Satyam falls
Wed Jan 14, 2009 5:12am EST

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MUMBAI, Jan 14 (Reuters) - Indian shares provisionally closed up 3.7 percent on Wednesday, snapping a four-session fall, following a recovery in global markets and led by Reliance Industries (RELI.BO) and Infosys Technologies (INFY.BO).

Shares in fraud-hit outsourcer Satyam Computer Services Ltd (SATY.BO) provisionally closed down 4.6 percent at 29.80 rupees on concerns about the company's future.

The main 30-share BSE Index provisionally closed up 331.97 points to 9,403.33 points, with 25 components gaining.

The 50-share NSE Index .NSEI.BO provisionally closed up 3.92 percent at 2,852.65 points. (Reporting by Janaki Krishnan; Editing by Ranjit Gangadharan)

Letter from Price Waterhouse to the Satyam Board

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Letter from Price Waterhouse to the Satyam Board

Hyderabad, INDIA, January 14, 2009: Satyam Computer Services Ltd. (NYSE:SAY) announced today that its Board of Directors received on January 13, 2009 a letter from Satyam’s statutory auditors, Price Waterhouse, stating that Price Waterhouse performed audits of Satyam from the quarter ended June 30, 2000 until the quarter ended September 30, 2008 (the “Audit Period”), and notifying the Board that in view of the contents of the resignation letter of B. Ramalinga Raju, former Chairman of Board of Directors of Satyam, Price Waterhouse’s audit reports and opinions in relation to Satyam’s financial statements for the Audit Period should no longer be relied upon.

Satyam Contacts:

For clarifications, write to us at
Or contact our global Satyam PR representatives at:

India Deepa Jayaraman


US Melissa Baratta

+1-212-679-3300 ext. 118

Europe Sandeep Thawani

Asia-Pacific Dan Bleakman

Reshma Wad Jain +65-98-140-507

Safe Harbor

This press release contains forward-looking statements within the meaning of section 27A of Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Satyam undertakes no duty to update any forward-looking statements. For a discussion of the risks associated with our business, please see the discussions under the heading “Risk Factors” in our report on Form 6-K concerning the quarter ended September 30, 2008, furnished to the Securities and Exchange Commission on 07 November, 2008, and the other reports filed with the Securities and Exchange Commission from time to time. These filings are available at

Satyam Overlooked Oversight

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Satyam Overlooked Oversight
No one can stop a cheat from committing a crime. But the fraud at Satyam went undetected for five years, suggesting that governance failures bear some blame.
Marie Leone - | US

The $1 billion accounting scandal at India's Satyam Computer Services has raised several key governance questions about the company's board and its auditors. One of the most perplexing is: Where does the buck stop. That is, why didn't oversight mechanisms uncover the fraud sooner?

One governance expert claims that a lax regulatory system in India bears at least some of the blame. "Corporate governance in India was late on the scene, it is more politically motivated than legally based, and regulatory laws and agencies are burdened with the complex, slow-moving legislative and judicial processes," charges John Alan James, a governance expert and adjunct management professor at Pace University's Lubin School of Business. "A governance disaster was predictable."
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* Satyam's Sins Spur a Credit Suisse Wish List
* Offshoring's Uncertain Future in 2009

James contends that until 1991, the attitudes and government policies in India toward capitalism and private businesses were "antagonistic and unhelpful," as state-owned banks limited borrowing to "national superstars," such as high-tech manufacturers or niche companies that helped satisfy central planning goals. But once capital markets became more liberalized, and the economy started to expand, India's position as an outsourcing leader took hold, with governance best practices lagging the economic explosion, adds James.

The fraud was astonishing when it came to light. Last week, Satyam, Indian's fourth largest computer software services outsourcer, revealed that its former chairman, CEO and founder, B. Ramalinga Raju, wrote a four-page letter to the Bombay Stock Exchange, confessing that he orchestrated a massive accounting scam and kept it alive for at least five years. In the letter, Raju admitted that he created at least $1 billion in fraudulent cash entries on the company's books that went undetected for years. Raju, his brother B. Rama Raju, and company CFO Srinivas Vadlamani were arrested.

Then this week, Indian press reports said that in a statement to the courts, Vadlamani claimed he was not involved in improper bookkeeping, but was aware of suspicious behavior at the company for more than five years.

Many experts cast partial blame for the scandal on Satyam's auditor Price Waterhouse India, because the fraud went undetected for so many years. Price Waterhouse India is a member company of the larger PricewaterhouseCoopers International network, but is legally separated from the larger organization. That legal "firewall" allows Big Four audit firms to have their cake and eat it too, says H. David Sherman, a former SEC academic fellow and current professor of accounting at Northeastern University.

Big four annual reports talk about one quality standard for the entire world network of offices, but that takes coordinated global training and quality assurance efforts. If the firms truly do create global training and coordinated quality standards, it could open up debate regarding the amount of liability protection that is or should be provided by the legal separation of offices in each country.

For its part, the Bangalore-based Price Waterhouse said it is working with Indian regulators and law enforcement agencies to sort out the accounting scam. It added that its auditors followed proper procedures and backed up their work with appropriate audit evidence. However, Price Waterhouse warned the Satyam board that the audits in question could no longer be relied upon. The audits span the period from the quarter ended June 2000 through the quarter ended Sept. 30, 2008, said Price Waterhouse.

So far, no legal action has been taken against Price Waterhouse. There's only been speculation about a lawsuit against the Indian auditor, probably sparked by the recent lawsuit filed against BDO Seidman in connection with the alleged $50 billion Ponzi scheme run by Bernard Madoff. Seidman was not the auditor for Bernard L. Madoff Investment Securities (the private accounting firm Friehling & Horowitz is the Madoff auditor). But BDO Seidman was the auditor for Ascot Partners, which invested heavily with Madoff's firm.

Despite the absence of a lawsuit, the audit firm is still left with a huge black eye. To be sure, the scandal does not seem to be a convoluted, off-balance-sheet, Enron-like scheme, but rather a straightforward overstatement of cash. That would sting the reputation of any accounting firm, considering that the first assignment any new auditor gets is to audit the client's cash accountants.

The basics of such an audit are also straightforward, although it can be incredibly time consuming for an operation as large as Satyam. In general, bank statements are collected from the client and the client's bank and matched up with entries, and cash accounts are rebalanced with respect to outstanding receivables.

To be fair, there were probably thousands of Satyam cash accounts that had to be confirmed by the auditor, as the outsourcer has nearly 700 customers — including 185 Fortune 500 companies — in 65 countries. The audits for a company of that size would have been staggered, with millions of dollars of outstanding receivables pouring in to different locations at any given time. So if the Raju brothers knew their auditor's routine, it would have been relatively easy to create phony entries throughout the system.