Readers might remember my very last Ovum Holway Hotnews piece in Dec 06 (see below if you want a reminder!) 
I retold my "never been a bad time to buy Apple" story. Because I was freed from the constraints that Ovum imposed on writing about shares you owned, in Jan 07 I put my money where my mouth was and bought Apple stock at $87. So far they have been the second best performer in my new/post Ovum portfolio. 
For anyone interested, I bought Apple/Axon (I like Mark Hunter) /BT (I'm on BT Global Services Advisory Board)/Capita (Boringly obvious) /EDS (great recovery story and prospects)/Finsbury Tech Trust (I was appointed as an NED) /UBM (my mate Geoff Unwin is the (retiring) Chairman)/Vodafone (not sure why other than the amount I seem to pay to them each month...probably the daft decision of the pack!). After 4 months the portfolio is up 7%. Axon leads - up 21% with Apple up 14%. That compared to the FTSE100 up 4.3%. So, the comparison is clearly OK...but I had hoped to beat it by a bigger margin.
Apple's results this week were a real stunner - beating all expectations with an 88% increase in earnings on the back of Mac sales up 36% and iPod sales up 24%. Guidance on future expectations was increased too. All that is before the iPhone ships. The excitement around this product is palpable. At the time of launch, expectations were around a 1% global market share of the mobile phone market. I've read reports in the last week which suggest 5% might be achievable and that the iPhone will eclipse the iPod in terms of speed of consumer take-up. Indeed, if my friends are anything to go by, they are waiting the IPhone rather than upgrade either their current iPods or mobile phones.  
Shall I just HOLD or ADD to my holding?

Reproduced from Ovum’s Hotnews
21^st Dec 06
What I’d like for Christmas 2007

 Many readers will have attended the annual Techmark Review debates between myself and Richard Kramer at Arete Research which were organised by Deloitte. Unlike Arete, I’m not a “stock picker”. Indeed we at Ovum are not regulated to give any kind of financial advice.

At the end of the debate in Jan 04, we are both asked for our stock picks for 2004 and I rather rashly (and with all the legal caveats I could muster) suggested that I’d put my money on Apple whose share price then was $10.

At the next session in Jan 05, Kramer and I had some interesting public repartee about this as Apple had risen to $32 by then. Was it too late to name Apple again as a Stock Pick for 2005? We settled on Kramer buying a lunch for the Ovum team if Apple rose still further in 2005.

Apple ended 2005 on $71 and Kramer royally entertained us!

It really seemed to be pushing my luck to suggest Apple as a Stock Pick for a third year. But that’s what has happened with Apple now on $85.

Interestingly I note that analysts are now setting a target of $110 for Apple for 2007.

I really will leave the stock picking to others better qualified than me. But as a life long Apple fan, I have to admit that I can see few rivals around that are likely to knock Apple off its unrelenting growth path right now. I see no rival to the iMac in my living room. Indeed as an entertainment centre in the Holway household, powering our 50 inch plasma screen where I show my photographs and videos all edited by Apple’s iPhoto and iMovie and playing my iTunes music around the house, it always provokes envy from our visitors – many of whom have gone right out and bought the same setup. Next year we will see iTV being shipped which seems to me to be the right product at exactly the right time. I don’t see Microsoft’s Zune being even making a dent in the iPod market. Apple reports continued growth in iTune downloads and the video part of this is only in its infancy.

Personally what I’d really like for Christmas 2007 is an Apple iBlackberry. I might then get my ultimate Martini Moment; doing everything I can do with my Apple setup at home “Anywhere and Anytime”  

Sir Julian Horn-Smith has resigned as Chairman of Sage after just over six months in the post. "Differences in style and culture" were cited.
I have to admit I was was surprised when this appointment was announced. There were much more suitable candidates to take over from Mike Jackson who rather shot himself in the foot by accepting the Partygaming.com "shilling". Jackson was therefore forced into a position of giving up the very job which had made his name and reputation. We are sure a choice he regrets. 
But clearly Sage must regret its choice of replacement too. Horn-Smith was from the Chris Gent, not Arun Sarin, era at Vodafone. I would imagine it was a personality clash with CEO Paul Walker that was the killer. Anyway, Sage is much bigger than Horn-Smith and we doubt it will be damaged too much. However, it needs to make the RIGHT choice of Chairman next time.
Sage is entering a difficult time in its evolution. It faces increased competition in a relatively mature market. To grow it will have to diversify. But that is dangerous for a company that has done so well by "sticking to the knitting".
We have long predicted that Sage will be acquired. Intuit is the favoured partner. 
Wait long enough and all Holway's predictions come true in the end! 

I'm a sucker for a clever headline so "Advert familiarity breeds content for Google" in today's FT certainly caught my eye.
Google's Q1 results are...Well, the word "impressive" would not be an over statement. Revenues up 63% at $3.66b and profits up 69% to $1b beating analyst forecasts by a country mile. Of course, it's Google's core search business that drove practically all of this performance. Google is now the defacto standard in search - in the US a 64% share compared with nearest rival Yahoo's 21% (Source - Hitwise). As revenue growth rates in the internet advertising and search markets are also stellar, even if Google just "stuck to the knitting" it should continue to do well.
The UK did particularly well with revenues of $578m or 16% of the Google's global sales. Not surprising given the high internet/broadband use in the UK and our propensity to buy loads of product and services online. 
But, of course, all the headlines recently have been about Google's expansion into other areas. Youtube was just the start and a "minnow" (did I really apply that word to a $1.65b acquisition?) compared to the $3.1b it intends to pay for DoubleClick. Other deals will take Google into newspapers, radio and TV advertising.
With Google's dominance and associated financial resources, it can afford to take risks in its "out of the box" expansion. Indeed, I'd be the first to criticise Google if it did not take some risks. Google apps is clearly a risky venture. But one which is destined to put a real rocket up the complacent competition - ie Microsoft. Personally I have my doubts about Office Apps and SaaS.  I think SaaS is much more applicable to business apps and, for consumers, for seldom used, non critical things. But I'll stick to Word, Excel and Powerpoint on each of my PCs/laptops for the time being at least! But I'll praise Google for providing the choice - and the competition!
Google stock rose $15.15 or 3.2% in after hours trading once the results were announced. Having said that, even at $487, that's below the Jan 07 peak of c$510.

I'm delighted to announce that I have joined the board of M&A specialists, Regent Associates, with effect from 1st Apr 07. To be precise I have become an non exec director of Regent Partners International Ltd - the Holding company of Regent Associates Ltd.
I've had a very long association with Regent stretching back to the late 1980s. I've spoken at every Regent Conference (except the last one) and have relied on their excellent M&A research for many years. Indeed I have built up the greatest respect for Peter Rowell and the other members of the Regent board.
Indeed those "in the know" about this appointment have said that it is a "natural fit" for both parties.
To see the full Press Release Click Here.

Think London has announced a 40% surge in foreign investment projects in London. What struck me about this was the "record number of Californian IT companies like Google, Myspace and Bebo that have opened up in London". The FT speculated that "the fact that many global media companies, advertising agencies and telecomms operators have headquarters in London makes the City a good place to be". Indeed, I have long argued that the place to be is in "ICT-enabled" businesses rather than in "pure" IT. The ICT-enabled hotspot right now is media and clearly we Brits are rather good at that! Personally I think the very future prosperity of our green and pleasant land lies in us both realising that and exploiting it. We really don't need to train our young people for "pure" IT jobs which will not exist in a few years time. These jobs will be off shored in one way or another. We should concentrate on training our youngsters on how to USE ICT so they can go on to exploit our great media talent.
London is also the place to be a top IT consultant. The Association of IT Staffing Companies says that pay for IT consultants rose by 17% to £43,4000 in 2006 and that there is a shortage of top project managers. Well, that is hardly news - there has been a shortage of top project managers for as long as I can remember! 
You might think that this second news item contradicts my earlier comment that we should not be training our youngsters in "pure" IT. It does not. The real shortage is in IT consultants with BUSINESS expertise and experience. Ie exactly the kind of "ICT-enabled" skills I have been banging on about. Companies like Accenture realised the need to operate at that top level/high value add part of the chain and their results show how attractive that model can be.

The Financial Times today carried a report on the dramatic decrease in global music sales; down 16% from last year and far below the $45bn peak achieved in 1997.
It was the classic Holway "Shape of things to Come" chart with revenues from CD sales declining but revenue from downloads growing - however at nothing like the rate required to stop overall total sales revenues from declining year after year
For those of you who need reminding of the Holway "Shape of Things to Come" - see below!

2nd Apr 07
First Data in $27b private equity cash buyout 

Throughout most of the years of writing the annual Holway Report, I always featured First Data in the Top Ten of Global IT services companies by revenue. When I started in computing ,back in 1966, our industry was dominated by computer processing bureaux like Baric, Centrefile, Datasolve etc. First Data is a computer bureau specialising in electronic payments - mainly credit card payments. Formed way back in 1971, Amex took an 80% stake in 1980 and went public after it was spun out in 1992. First Data merged with Concord EFS in a $6.6b deal in 2004.
Anyway, enough of the history lesson. Tonight First Data accepted a $27b CASH buyout from US private equity company Kohlberg Kravis Roberts (KKR). The bid is a a 21% premium to FD's share price before the bid. Not a bad price either given that FD had revenues of $7.1b and Nett profits of $848m in FY 2006.
This is the biggest ever private equity deal in our sector. Indeed, it is only just behind the $32b buyout of TXU; which will be the biggest if that deal is consummated. 
It dwarfs the $5.9b ACS pe deal announced last week or the biggest of all, until today, Sungard (March 2005 valued at $11.3b). See our report on a likely E3.6b private equity deal at Atos Origin (27th March 07 in archive)  
So now there really is no global IT services company "out of bounds" to pe who are clearly "on a roll". Watch out EDS and CSC. Your turn next!

2nd Apr 07
IBM wins Somerset CC

I note that Somerset CC and Taunton Deane BC have announced IBM, with its partners HBS and Mouchel Parkman, as preferred bidder for their "unique" shared services partnership to supply HR, finance, procurement, ICT, property, customer services, FM and support services to both councils. It is "unique" in that 30 other public sector organizations, across Cornwall, Devon, Dorset, Gloucestershere and Wltshire have expressed interest in joining in with the deal ;as well as Avon and Somerset Police Authority. This is all part of the HM Govt's programme towards Shared Services as a means of increasing efficiency (ie driving down costs)

The deal is worth £400m over 10 years. 800 staff will transfer. Capita and BT were also in the "last three" bidders. Indeed both were reckoned to stand a higher chance of being award the deal than IBM - which has little Local Authority experience. Capita is, of course, the UK BPO leader and BT has growing experience at Suffolk, Liverpool, Kent and now Sandwell.

2nd Apr 07
Indices

The end March updates to the indices I track can be found Click here or see below.
One of the rare occasions where the UK has performed much better than the US. Techmark100 is up 6.1% YD (2.8% in marc) compared with a flat NASDAQ for both periods. FTSE Mobile Telcomm was down 4.1% - mostly as a result of the Vodafone tumble. VOD is down 7.5% this year as its margins are eroded in the "mature" UK market. Europe has fared even worse with Euro tech isdown 3.9% YTD and Euro telcoms down 3%.
For some time we have tracked two other sectors alongside "tech". Support services (which includes Boring capita and the other BPO players) is up a respectable 5.1% YTD (4.1% in Mar) and Media is up an even more respectable 7.2% YTD (4% in Mar). As we have said many times before, if your expectation is that your ICT shares will keep pace with the indices, you might as well invest in a Building Society.