5th Feb 07

Sorry...No more posts for several weeks 

It was my 60th this weekend. Had a great Birthday Bash on Saturday. My dear friend Anthony Miller said some very kind words..as did my wife!
We are off to India tomorrow. 
I'll think carefully about the future of the "Blog" whilst I'm away. Feedback so far has been truly fantastic. Several offers to "host" it. Not sure if I want the commitment again though! My holiday would not have been possible for that very reason for the last 21 years. Do I want that AGAIN?

5th Feb 07

AIM Nomads

I guess that one of the most often asked questions of me over the years has related to which brokers I might recommend for an IPO or whatever.
Today, The Times runs a review of the worst and best performing AIM nomads in the period 2003-2006. Click here Seymour Pierce gets the wooden spoon as the "Worst Performer" as an average investment of £1000 in each of their IPOs would now be worth just £799.
But actually the wooden spoon should have gone to Bridgewell. 67% of their AIM IPOs are now trading under their IPO price (Seymour Pierce was 'just' 57%). On the average £1000 investment test Bridgewell comes out at £833. Interestingly, Canaccord Capital got the best score (£1954) closely followed by Investec
I've never been in a position to write about my experiences with Bridgewell. We had wanted to use Investec for our IPO after out beauty parade but they were forced to pull out at the very last moment due to a "Conflict of Interest" as they were also Datamonitor's brokers. Something which they had assured us was not a problem during the bid process. We then selected Baird...which promptly got acquired by Bridgewell!
The IPO process itself went smoothly. To be honest, Ovum were as "clean" a company as you will ever find and the "story" was pretty compelling.  We were not surprised at the over subscription. What we were surprised about was the lack of post IPO sales activity. The 190p share price drifted down to 165p. I, as well as other directors, bought in to show support...it didn't work. We did two acquisitions in six months ..exactly what we said we would do in the Prospectus. And we issued two really upbeat trading statements indicating that we would beat expectations. But still the share price languished.  So when we got approached by Datamonitor it was so much more difficult to repel the raiders. I won't go into any detail of this for obvious reasons. But if our own share price had been edging up towards £3, as it should have been on any metric, I doubt if the Datamonitor bid would even have been attempted yet alone succeeded.
As it was, as a director, I was made to feel that it was my "duty" to support a bid so that those poor fund managers who made up our new investors, who had taken a bath on their other AIM IPOs, could balance their books and earn their end of year bonuses! That was NOT what I had worked 21 years to achieve!
Since the deal has completed I haven't met a single Ovum shareholder (internal or external) who actually wanted to sell their shares before the bid. Indeed several of the fund managers told me that, although they liked the £3, they hadn't got a better new home for the money. They would have preferred leaving it in Ovum!
Everyone of the Executive Directors who built Ovum to the fine reputation it has today have departed in the last month..including myself of course.
Next month Ovum has been shortlisted for "AIM IPO of the Year (2006)". What perfect irony it would be if Ovum won!
Hey Ho...as they say!

2nd Feb 07

More Torex 

According to the FT, Click here Torex CEO Neil Mitchell was the "whistle-blower" which caused the investigation. Mitchell wants to be reinstated and is quoting legislation which protects whistle-blowers in such circumstances. FT also reveals that the homes searched earlier this week were those of Ch Chris Moore, the former exec chairman Rob Loosemore and "close associate" Mark Woodbridge. Both Moore and Woodbridge were named a few months back as being investigated by the FSA over the iSoft debacle too. 
More insight from today's FT. Click here

2nd Feb 07

More BT INS 

The FT today Click here reports that BT paid $250m for INS. An Ovum report suggests $150m. Given that INS has revenues of c$140m, the difference is quite significant. As we said below, a PSR of around one is the "norm" for such companies so we hope the consideration is nearer the $150m level. Also, revenues of $140m pa and 900 employees equates to a Rev per employee of just $155K or c£80K. That's considerably below the average we would expect.

2nd Feb 07

NHS IT 

David Nicholson, speaking at an NHS Conference, confirmed that "Responsibility for implementation is being shifted away from Connecting for Health, the national programme, to strategic health authorities, with all NHS organisations now being told to produce and budget for an IT implementation plan."
The report goes on to warn that "the changes carry the risk that any significant slowing down of the project, or any big move away from national standardisation, could open up the NHS to claims for contract variation from the big suppliers - something both sides appear keen to avoid." See FT report . Click here

I've written about this on many occasions before. ALL IT projects (whether private or public sector) go through wobbly phases. The NHS IT project is one of (if not the) biggest IT "transformations" ever. It shows signs of having turned the corner. Indeed I agree with Patrick O'Connell from BT (see below) that by the end of this decade we will all take the features that the NHS IT provides for granted and wonder what all the fuss was about (see self assessment, Passport Office etc for illustrations of "wobbly patches" being forgotten) 

But to change the rules and the exec management at this point is hardly advisable. All this will just give the suppliers "wiggle room". Surely that's exactly what the critics of the project DO NOT WANT?

1st Feb 07

Not a bad start to the year 

Tech stocks both in the UK, Europe and the US on average ended "in positive territory " for January. This compared with a minor -0.28% decline in the FTSE100. UK SCS up 1% and UK Telecomms up 4%; due to a strong performance from the mobile operators. Yet again, though, Support Services (that's the index that covers the likes of Capita) performed best - up 2%.

For the detailed changes in the indices we track, Click here.

1st Feb 07

Google and Dell 

Two stories from the US last night caught my eye:

- Michael Dell has booted out Kevin Rollins and stepped back into the CEO role himself. Well the last four years under Rollins has been a near disaster for this once role model of the PC world. As the great enemy HP recovers and prospers, Dell has faced a magnitude of problems. HP regained its No One slot last year according to IDC with 18% of the world market compared to Dell's 14%. If it was just market share, that could be easily addressed. But it's Dell's image in the eyes of its customers that has been tarnished. Many customers have had such bad service experiences that they have vowed never to buy Dell again - however much discount they offered. That's a much tougher job for Michael. I'm not overly in favour of past CEOs returning...but Dell desperately needs to reinvigorate itself and Michael's probably the best bet around right now to do that.

- Google just keeps powering ahead. Latest Q4 figures last night were pretty impressive with quarterly earnings tripled. 2006 full year rev were $3.2b (up 67% on 2005). In turn, it doubled the size of its workforce in the year to 10,700. The "problem" with all this is that Google just keeps beating expectations - it has done that in every quarter since its IPO. Analysts who said the IPO price of $85 was too high have to each humble pie each quarter. They must be obese now as the Dell share price hits $500 and its market value exceeds $150b. Can it go further? Bluntly, YES! Google is the powerhouse right now. I applauded the Youtube acquisition last year and the effects of that are still to come. The BBC is in negotiations for Youtube to carry its complete archive back catalogue with Google responsible for "revenue-ising" it from ads. Then there is the upcoming tussle with Microsoft over apps like Word, Outlook etc. 

1st Feb 07

Acquisition 

Two acquisitions of note announced this morning:

- BT Global Services has acquired US International Network Services Inc. INS employs c900 people in 12 countries and provides IT consulting and software solutions in Enterprise Architecture & Governance, Business Productivity, Information Risk Management and infrastructure Transformation. No financials were given in the Press release. Click here.

- Detica is to acquire DFI International Inc for $39.5m. DFI is a private US national security consulting group. It reported revenues of $38.8m (up 38% on the previous year) to 30th Sept 06 with an op. profit of $2.3m. So the price looks pretty much in line with the norms of c1x revenues for this type of business. Click here

Interesting that BOTH of these are UK companies buying in the US. I suppose the exchange rates helps but it is a great reversal of so many stories I have reported on over the last goodness-knows-how-many years. They both seem to fit too. Detica played a blinder moving into Security a few years back and this new acquisition fits them like a glove. INS looks right for BT GS too. Trouble is it is not that big - my guess would be sub $200m revenues. BT could do something ten times that and it wouldn't break the Holway Acquisition Indigestion test.  

1st Feb 07

Torex 

The sorry saga at Torex continues. Yesterday Ch Chris Moore and CEO Neil Mitchell bth stepped down from their positions - although they remain on the board. Iain Lynam from Aaronite partners has been appointed to lead a "Committee" charged with restructuring the group.
The FT published a very good backgrounder to the situation together with a "Who's Who" (or is that Who was Who?) at Torex. Click here. Interestingly, it too mentions the effigy burning incident (see below).