> NEW YORK, Nov 24 (Reuters) - Merrill Lynch said in a > research note that it started coverage of Satyam Infoway > with a near-term accumulate recommendation noting the > Indian Internet firm's rise since its initial public > offering.
ML is issuing a very guarded statement.
What ML probably is saying that if the price had been lower we would have a strong buy rating, but with the price so high we can't do that and have our clients buy, and then see their value plummet due to the volatility.
WHat SIFY is trying to do is an all under one roof strategy simply because there are no other companies strong or even existing in those business spaces. That allows them to sell numerous products to the same client. That is the big bonanza.
SIFY has a head start in the ISP market and they should be able to leverage their client base. Their new ad model (which DCLK and TFSM have been using for a number of years), is attractive to the companies since they only pay for when it is accessed. SIFY could probably end up spinning of their ad server/business.
SIFY does web hosting for those companies and building eCommerce infrastructure for their clients.
SIFY is building an internet backbone/gateway which they should be able to leverage for eyeballs.
With deregulation will come a rush to access these services. What SIFY should do is follow AOL's business model in building a strong portal. AOL has 20 m customers, but compare AOL with SIFY when AOl was 6 months old or 1 year Old.
As ML says SIFY is a quality stake in one of Asia's premier internet opportunities. Actually I say in India taht's teh only quality opportunity available although other companies can ramp up pretty fast. The difference is that SIFY offers cross products NOW. Also SIFY can bundle tehir services with the computers the parent company sells.
SIFY need not be profitable. What is key is the growth in subscribers, eyeballs, growth in clients ... I think SIFY is well positioned to become the 800,000 pound Gorilla of the Indian ISPs,with a YHOO,AOL,DCLK,AMZN,EBAY type revenue models.
Now, if only they did something about their press releases and PR. WHo do they have for PR. Elmer Fudd ??? which is why SIFY also has the potential to be the 8 pound has been chimp. |
