The wheels have come off at Satyam Computer Services (SAY). The company, which just a few weeks ago tried to pull off a giant acquisition of two companies tied to founder B. Ramalinga Raju, shocked the Indian stock market on Wednesday with news that Raju has resigned after admitting he overstated the strength of the company’s balance sheet and misreported the company’s profits. The company’s shares were trading down as much as 70% in India this morning.

Reuters has published a copy of his resignation letter, in which Raju confesses to trying to use the the failed acquisitions to “fill the fictitious assets with real ones.”

A stunning tale, which is going to cost holders a lot of money.

  Barron’s Tech Trader Daily

What a mess.  Satyam was the 4th largest IT company in India.  This puts a shadow of doubt on all companies controlled by Indians.  Possible side affects against outsourcing companies as well.

It will take a while for this to subside.  If there is another blowout from some other company (likely given the financial meltdown worldwide) this could destroy the Indian IT market.