The last email I sent via Tiscali that was actually delivered was last Thursday. Since then I've become very familiar with their so-called Support Centre (in India..) and their Forums.

Friday thru Monday was spent getting increasingly cross because nobody at Tiscali would admit there was a problem. All their Service Status indicators were showing 100%. Eventually I made a complaint to the ISPA. I then got a call from a Tiscali manager called Chris Eadie who must rank as the most obnoxious person who I have ever had the misfortune to encounter. Just as Tiscali were admitting they had a serious problem on their website he was saying the opposite on the phone.
Anyway, you might by now have heard one of the many news reports about Tiscali being hit by spammers which means that any email coming from Tiscali has got blacklisted. Amazingly also by their own servers! According to their spokesman, this might take 7-10 days to resolve.
It's an amazing admission. Tiscali customers are "somewhat angry". I suspect that many will now leave in droves. Certainly this seems to be the event that will make me change ISP too. Note - What a great marketing opportunity for other ISPs!

Also, you would have thought that consumer organisations would, by now, have learnt how to handle crises like this. Tiscali continue to do everything wrong. Working Lunch on BBCTV today featured the problem but Tiscali managers refused to be interviewed! The lies that I have been told over the last few days would make Jeffrey Archer look like a Saint. 

What it has taught me is how important it is to have more than one method of sending email. Fortunately my Blackberry and Vodafone Mobile Connect services have enabled me to keep working.

A lesson to all of you!

If you believe The Times today, Permira, Blackstones and KKR are all considering pe bids for LogicaCMG. That was what we alluded to in our note earlier! 

So who will be the next LogicaCMG CEO?
"The head of European operations for a large US-based IT company would make an ideal candidate for the job, analysts said." (BTW - NOT me!) FT 30th May 07.

We've already had Alistair Cox (Xansa), Tim Smart (BT) and Steve Vaughan suggested as well.
Any others?
No disrespect to any of the internal LogicaCMG candidates but this just MUST be an external appointment.

As you might have read Guy Haines at CSC (See above!) has now objected to the IBA acquisition of "troubled" iSoft. They have every right to do so. The times reckons that CSC now favours McKesson as a purchaser. But, bluntly, why doesn't CSC wait for iSoft to call in the receivers? They already have "control" over the software needed for the NHS IT contract. They (or McKesson) could then pick up the assets for a song as well. What possible motivation do they have to do a deal?
Now you might think I feel should feel sorry for the shareholders who would then lose everything. But, again bluntly, i think that iSoft has done the reputation of the UK IT sector some considerable harm and the shareholders must share that pain. 
I do however feel greatly for the staff and (many of the) creditors. But that's another matter.

It has just been announced this evening that Martin Read would bring forward his retirement plans following the firm's recent profit warning. LogicaCMG said Read would stay until a successor had been found.
"In the light of the unsettling speculation following the company's recent trading update, Martin Read has decided to accelerate his retirement plans," LogicaCMG said in a statement issued by email at 8.30pm on Sunday night.
Well, I hope it wasn't anything I said in my most recent postings (see below)! Although I might be critical about the most recent profits warning, I've had a long association with Martin. I've spoken to him early on the day of EVERY full and interim announcement since his appointment in 1993. I've seen him build Logica from 3000 employees and £200m revenues to over 40,000 and revenues of around £3b today. 
But, as they say, "Size isn't everything". As a shareholder it's been an unrewarding road. At 157p, that is actually LOWER than the share price was TEN years ago in 1997. And, of course, it is a fraction of its 2400p peak in those crazy dot.com days of 2000.
Indeed it looks as if it was the shareholders "whot done for him". Morley, which owns 2% of LogicaCMG, is reported to have demanded Read's head last week. Shareholders have also demanded a board with a better balance of independent directors. Too many of their NEDs (like Chairman Cor) have had past executive links with the company. LogicaCMG said in the statement that they now intended to restructure the board.
It was also reported that Read will not get a payoff. Indeed, most of his options are currently under water.

The Martin Read Years
I looked up Logica's 1993 results - the year of Read's appointment as CEO and my first interview - and compared them with the latest figures. The results make an interesting comparison and, perhaps, explain some of the shareholder frustration.

In other words, the significant increase in Logica's size - a major part of which has been by acquisition - has NOT been translated into Earnings per Share growth. EPS growth is (as most readers know) my main (if not only!) performance measure. Not surprisingly, Logica's share price growth has pretty much mirrored EPS growth. 
On the other hand UK SCSI stocks are up, on average, by 225% since 1993 - about the same as for Logica. The FTSE100 is up by about 120%.

Nostalgia
I understand that I got mentioned in several Read internal briefings. My most notorious comment, some ten years back, was that "Logica is like a car which always seems to have one of its cylinders misfiring". At every briefing since, it seemed that one cylinder got fixed only for another to develop a fault. It just went on and on and on. Last week it was Logica's commercial work in the UK - something that had seemed to be going OK. "What next?", I felt myself saying.
Another story I often told was asking Martin what his ambition was. "To lead a FTSE100 company" was the reply. I remember I quipped that he didn't actually specify, and I was never quite sure, whether he meant Logica or some other company! LogicaCMG did make it into the FTSE100 for a brief period. With the recent acquisitions I thought there was a chance that he'd make it again. Martin clearly thought that too. Maybe it was the realisation that it was not to be for some considerable time that made Martin's mind up that now was the time to quit.
On my very first lunch with Martin in 1993, I remember telling him that David Mann (the previous CEO) and I had talked about Logica going into outsourcing and AM in particular. Mann thought that a company with people capable of designing the control systems for Trident were not likely to undertake such work. Read was incandescent. "Any person in Logica who will not undertake profitable work of whatever type has no place here". 
Perhaps the high point in the relationship was when Read called me on 19th Sept 05. His first words were "I'm eating a bacon buttie with Didier Herrman (CEO of Unilog) and introducing him to the delights of English cuisine". He made the same quip again on 21st Aug 06 when LogicaCMG bought WM-Data. LogicaCMG seemed well on the way to getting into the Global Top Ten IT services company listings - something that Martin had set his heart on. Others thought that WM-Data was an acquisition too far. The cultures were too different to permit effective integration.

Shareholders, and some of the people who have worked for Martin over the years, might not cry at his departure. But I shall miss him. He treated me and my (ex) company well and I owe him. We worked closely together only last year on the CBI/DTI/LogicaCMG initiative on the Effects of Offshoring on the the UK IT Services Industry.  At 57, I doubt this is the last we will hear of Martin. Afterall he's already an NED on the board of British Airways.

And LogicaCMG? I have long felt that it was untenable as an independent company. I am sure the pe boys and LogicaCMG's competitors will be out with their slide rules early Monday morning.

I went to the Intellect Annual dinner on Thursday and we had a very interesting discussion on our table about how quickly fashions change in this 'Web 2.0' world. One of the guests (eminent, in his 60s, but I won't name him) said that he had just got used to "young people" talking about Myspace but now "young" people were telling him this was old fashioned and that Facebook was the place to be.
Indeed. Figures issued by Hitwise this week show that Facebook is the fastest growing social networking site in the UK with a 13% market share (still behind Myspace and Bebo on c34%).
Facebook is growing at 3% per day. Also this week, Facebook announced partnership agreements with 70 companies, such as Microsoft, with the aim of becoming a "Social Utility" - providing all the tools "young" people need.
The excellent MarketClusters newsletter quotes a "young" person on GigaOM explaining that "MySpace was a good 'gateway drug' to social sites, but Facebook is now 'my drug of choice'". Oh how really old that makes me feel!
Now, I've used the term "young people" deliberately. It would appear from the above, and my dinner conversation, that it's only "young people" that are internet groupies.
But in another Hitwise press release this week (strangely not mentioned on MarketClusters) it appears that Silver Surfers - those aged over 55 - are set to overtake 35-44 year olds as the largest online group. Silver surfers now represent 22% of all UK internet site visitors - up 54% since 2005 and up 40% since 2006. Silver Surfers are more likely to visit Travel, Money and News websites than any other group. Cruise websites receive 48% of their traffic from Silver Surfers. Family, Stocks & Shares, E-greetings, Yachting & Boating sites all record more hits from Silver Surfers than other groups.
So why is it that there isn't a social networking site specifically for Silver Surfers? Is it because the concept just doesn't work for that age group? Or is it just that nobody has ever thought of it?
Maybe I should fill the vacuum and set one up!

A reader pointed out to us that 137m shares were voted against the LogicaCMG Remuneration Report at this weeks AGM. (it was carried as 731m shares were voted For). but still that's quite a rebellion.
LogicaCMG shareholders have much to moan about. It's now the worst performing share this year in my own personal portfolio - down 17%.
This week LogicaCMG issued a surprise profits warning, citing commercial work in the UK. This was compounded by losing the Transport for London outsourcing contract to CSC. Although this was known already, LogicaCMG clearly expected to pick up other commercial work to compensate. It failed.
My old "Number Two" - Anthony Miller, now at Arete - put out a very interesting note (as always) highlighting that LogicaCMG faces offshore pricing threats in all its main business areas (UK, Netherlands, France and Nordics). With the UK public sector market now slowing. LogicaCMG will face pricing pressure there too.  Miller points out that LogicaCMG has been slow in addressing the offshore issue - only 10% or 3500 of its staff are currently located there.
This is an issue facing other Top Ten IT services players right now. The gulf in performance between the Indian players, the companies that have already addressed the issue (like Accenture and Capgemini) and the rest is getting wider and wider.
Clearly more and more shareholders are beginning to question Martin Read's stewardship over this issue.

After the Horn-Smith debacle (see 29th Apr 07 in Archive), who quit due to "differences in style and culture", the acting Chairman, Tony Hobson, has now been made permanent. Hobson has a pretty good pedigree. he's currently Ch of Northern Foods and an NED at HBOS and Glas Cymru. but he lacks any obvious IT experience.
Sage is entering (already in..) a crucial period of its life when its core market will not provide sufficient growth to satisfy investors expectations. It therefore has to move into adjacent areas - with all the associated  attendant risks. Sage is largely untested outside its core. That's why some analysts have been nervy about its recent acquisitions. Sage's share price is already down 9% this year so far -against a FTSE100 which has risen 7%.

On Friday, Microsoft announced its biggest ever acquisition, spending $6b on aQuantive - an internet advertising/marketing group. (It's biggest acquisition up until then was the $1.45b it paid for Navision in 2002) This comes hard on the heels of Google buying DoubleClick for $3.1b. The "frenzy" continued with Yahoo spending a mere $680m buying the rest of RightMedia and WPP spent $649m on 24/7 Real Media last week alone.

aQuantive had revenues of $442m in the last year so we are talking double digit sales multiples here. The bid was at an 85% premium to aQuantive's share price and was about 40% higher than the comparable metrics that Google applied to DoubleClick. Microsoft itself questioned that valuation at the time.

So is this a smart deal or a sign of sheer panic?

Given that online advertising is the the place to be - it's growing c40% pa - and that Google dominates in search-based advertising, Microsoft just must have a position or it's power will be further eroded. Home grown didn't work and, anyway, is too slow. So an acquisition it had to be. Then Microsoft saw all the likely buy candidates getting bought within weeks. They HAD to secure aQuantive. It was the only quality player of size left! It also had the advantage of being based in Seattle alongside Microsoft.

My problem is not with the acquisition per se. My problem is with "culture". All my experience shows that buying companies with or from different "cultures" inevitably causes great problems for BOTH parties. It is only when one "culture" prevails that progress is made. This often takes a long time and is incredibly painful. I'm talking HP/Compaq, Compaq/Digital, Capgemini/E&Y etal here.

Microsoft is now a mature - in tech terms "old school" establishment - PRODUCT company. It is buying a new upstart people-based ad agency. It is making some of the people involved very rich indeed. And, as we all know to our peril, rich employees are difficult to manage and often walk. Indeed people, rich or poor, walk if the "culture" changes.

I have no doubts that Microsoft HAD to do this deal. What they paid is a fraction of the $30b that Microsoft has in the bank. But will it work? Personally I doubt it for the "culture" reasons I give above.

Is that the end of this deal series?

Well, the coupling rumour that just won't go away is Microsoft buying Yahoo (see 5th May 07). And I had cultural problems over that one too.

I wrote about our experiences using Bridgewell as Ovum's broker/NOMAD. see Archive 5th Feb 07. Click here
Today it was announced that Bridgewell had accepted an offer from Landsbanki at 125p - 15p less that Bridgewell's 140p IPO price in June 2006. A sorry end to a sorry tale. Bridgewell will be merged with Teather & Greenwood. Clearly jobs will go. But whether these will include senior management is unclear.

Anyway, I will leave it to The Times today to express my feelings:

“The US criticism of AIM has been wide ly dismissed in London as sour grapes. It is certainly true that American politicians and regulators badmouth London as they see business drift away across the Atlantic. But not everything is perfect on AIM, as Bridgewell’s dismal experience, both as an AIM-listed company and AIM broker, shows” .

According to all the press and newswires on Friday, Microsoft was in talks to buy Yahoo for c$55b. If you read them this morning (Saturday) the deal is dead in the water. We will see.
It was interesting how all the very serious financial newspapers (like the FT) quoted the bloggers. I rather liked Charlene Li blog headline "Why Microsoft + Yahoo makes sense and Why it won't work". Many thought it would be another disaster of AOL + Time Warner proportions - or worse. 
In fact, I'd liken it more to old established HP taking over the new boy Compaq. You remember that they did this in order to stop Dell becoming the leader in the PC market. But combining the two ended up in a substantially lower overall market share for the combined entity. It was a major clash of cultures and didn't work. Most of the good guys from both organisations either left or were booted out. HP had to oust its CEO and return to its roots before it could start to regain its position again. I suspect a Microsoft + Yahoo would go down a similar route with Steve Balmer taking on the Carly role!
What this really demonstrates is how desperate Microsoft is really now becoming. It really hasn't made any inroads into rivaling Google in internet search-based advertising; which everyone now accepts in THE revenue earner for the next period. But buying Yahoo - which seems to have a quite different culture set to Microsoft - seems a very risky route. Google, for many people, is firmly entrenched as being the search engine of choice for "general" type searching. Yahoo does a better job in "niche" areas - like Finance. But would Yahoo + Microsoft make me, or millions of others, switch allegiances in general search?  
On top of that, the last thing that Yahoo needs is the monstrous deadweight of Microsoft dragging its development down. In Microsoft terms, Google moves at the speed of light in bringing new features to market. Mega developments like Vista seem strangely out of fashion today. I am really totally unexcited about a new way of doing word processing or spreadsheets. Whereas the BBC's programme archive on YouTube seems exciting as does the prospect of an iPhone by the end of the year or, indeed, combining the two and watching the BBC's archive on Youtube on my iPhone!
Both those developments are about Google + Apple. Now that's what I would call a deal!

I'm clearly not ready to be a Fund Manager yet. EDS looked to me to be a good bet based on their recovery and move (at last) to make use of lower cost resources in India. So I bought them into my portfolio at $27.75 a month or so back and was very happy with their steady progress - up 7% by Thursday night. However, Thursday's after the bell Q1 results announcements reversed all that gain in Friday's trading session. Although operating profits grew dramatically from $78m to $265m, revenues were flat at $5.2b and signings were down from $10b to $3.4b.
As we have preached many times, companies cannot prosper on cost cutting alone. Without organic growth, companies die. And you don't get growth without boosting order intake.
On the other hand, EDS is in transition. If it is rejecting unprofitable business and concentrating on margin improvement for a while, that is no bad thing. But it now needs a quarter of strong signings.
I won't be a seller quite yet. Anyway, I firmly believe EDS will succumb to private equity before too long and it won't be at $27.

Pretty good month for tech stocks as you can see from the table below. Indeed, NASDAQ made all its gains of the year in April.
In the UK, M&A activity has fuelled the growth at the lower end of the size scale. Surfcontrol was the latest - up nearly 40%. We suspect even more M&A, incl private equity activity, in the months to come.