The difficulties with the IPO at SmartStream grow by the day. First the price range was cut significantly - from c£300m to under £200m now. Now the IPO itself has been delayed - possibly by only a few days (but who knows...)

I'll give Ian Spence the credit for alerting me on this one as I was a bit busy yesterday. You can read his new blog on this at Click here. As some of you might know, Ian was an analyst at 'Holway' in 1999/2000. I could blag that I taught him all he knows and that was why he went on to become Techmark Analyst of the Year but I doubt I'd get away with claiming all the credit!

On SmartStream, I repeat the comment I made on my earlier posts. IPOs are, and always have been, a good barometer of the industry as they test 'forward confidence'. They are not about past or even present performance or conditions. They are all about what investors believe will be the near/mid term outlook. Any look at a Holway IPO chart of the last 20 years shows peak IPO rates a year before growth rates crashes. Nadirs in IPO rates (particularly when measured by IPO 'pulled') are followed by 2 years of 'hard graft' for the sector.

But this conflicts with several reports (see previous posts) from other learned analysts who suggest that this time around "tech will be a safe haven in the wild storm". Again, as we reported before, so far this year tech has far out performed the general market. That is very unusual (indeed in my experience, unique) Normally tech amplifies the market - does very well in good times, does appalling badly in poor times. There seems to be growing concern that we are in for a tough 2008. In the UK, with about a third of tech enterprise spending in the financial services sector, if that sector was hit badly tech just must suffer too. And will consumers still find money for the iPhone if they can't pay their mortgages?

In the past I'd be saying "just to be on the safe side, I think I'll keep my money in a building society". But you can't even trust them anymore!

Two bits of news today in the fast moving Facebook world:

1 - Facebook has (as pretty widely predicted) become the most popular social networking site in the UK. According to Neilson/Netratings Facebook received 6.5m unique visitors in Aug compared with 6.4m at MySpace. Bebo was third with 4.4m. Not only that but Facebook users spent on average 16 hours (yep 16 HOURS) on the site in Aug compared with 'only' 9 hours for Myspace users.

2 - According the WSJ journal today, Microsoft is pondering taking a 5% stake in Facebook which would value the company at $10b. You may remember that back in July, Mark Zuckerberg (aged 23....) said that he would only consider bids for Facebook at $10b. Anyway, now the WSJ reckons he thinks Facebook is worth $15b.

Of course, everybody thinks that social networking is the NBT and I would agree. But I have increasing doubts that Facebook is 'it'. My daughter has decided to leave Facebook as she is fed up with it. Many users are disenchanted with the ads which now appear with increasing regularity. And I am just fed up that the ideas I put to Zuckerberg in my Open Letter (see below) some weeks ago remain unanswered and unactioned.

If someone could provide a social networking site that was as slick and easy to use as Facebook, but also allowed me to separate the business, family and friends bits of my profile, that just might get my vote. Others believe that it will be social networking sites tailored to specific niche interests that will blossom. Perhaps the real answer - and NBT - is a clever combination of the two. I, for one, do not want to keep profiles on half a dozen separate social networking sites. Hence my 'MyTop' thesis presented at the ICT Leaders Dinner on 4th sept 07 (see below)

Perhaps Microsoft could do that. But part of me feels that Microsoft might just be taking this stake as a blocking tactic. Ie they don't want Google or Yahoo to get their hands on it.

LogicaCMG has announced that it is to be called just plain Logica from the start of 2008. It picked up the suffix in 2002 when Logica acquired CMG.

Logica is one of -if not THE best - company names in the business. It was well ahead of its time when Philip Hughes gave it that name in 1969. Since then every self respecting IT services company had to have a name ending in an 'a' - Capita, Civica, Xansa. Somehow 'Logica' just always felt right - in one way describing exactly what they did but sounding up-to-date too. Adding 'CMG' just ruined the timbre. Mind you, it all seems a bit hasty - removing all trace of CMG within days of Cor Stutterheim (the founder of CMG) standing down as Logica's Chairman.

One of the joys of not being part of any research organisation is my ability to buy and sell stocks - indeed stocks in the very sectors that I blog about! As readers will know, I bought a portfolio of stocks at the beginning of the year and, I'm pleased to say, the portfolio is currently up 11%. Much of that is due to two mega stars - Apple up 71% and Axon up 50%. RCM Technology Trust, which I also bought on my appointment as NED, is also up 10% on the year. My only dog has been EDS. It has now hit a 20% fall since I bought so I have sold and put the lot into Sage. If there is to be a sale of Sage, then clearly the stock has somewhere to go. To be fair, I have held Sage for many years - I think since the early 1990s. But today's purchase puts the value on a par with my other holdings. So I now have decent shareholdings in both my "Boring" companies - Capita (up 8% since I bought earlier this year - and Sage.

Just thought I should inform you...

According to a news item just posted by Thompson Financial, LogicaCMG will announce who is to be its new CEO in the very near future. The appointment will be from outside the company. As readers know Jim McKenna was appointed acting CEO when Martin Read stepped down - triggering the 'resignation' of Didier Hermann.

We ran a book on who the new CEO might be some months ago with Guy Hains (CSC) and Bill Thomas (EDS) heading the list. Some suspect the appointment will be from outside of the IT sector. So we will await with added interest.

Of course, the real interest will be whether LogicaCMG receives the inevitable bid interest - and from whom!

According to reports in the Independent this morning Click here SmartStream has lowered its price range for its IPO from £300m to "£175m -£200m" as a result of "current market volatility". SmartStream had revenues of £46.5m and an Operating Profit of £13.9m (before almost everything like depreciation, amortisation, share based payments, exceptionals - what we used to call "Profit before the Bad Bits") in year to 30th June 07.

According to an AFX archive news report (19th July 06), 3i lead an MBO of Smartstream in 2000 in a deal which valued them then at £83m. TA Associates bought out 3i in Q3 2006 for around £100m. So, even at £175m, TA will have seen a quite decent return over a relatively short one year period.

SmartStream was considered a litmus test for the reception others UK software houses might receive to IPOs. If so, this latest price reduction is not that good an omen. It looks as if investor reaction has been string - but not at the initial price. If the price falls anymore, we could see the IPO being pulled and a trade suitor lined up. Misys was suggested a year back but they had a few of their own problems back  then! Things a lot better at Misys now. 

On the other hand, I have always contended that we need a strong IPO market. It seems to 'pull though' everything else. It's the 'barometer of the sector'. And that barometer has been looking pretty weak of late.

Bloomberg carried this report a few minutes ago:-

"Infosys Technologies Ltd. Chief Financial Officer V. Balakrishnan denied reports that India's second-largest software maker is in talks to buy Sage Group Plc or Atos Origin SA.

Bangalore-based Infosys also isn't negotiating with Cap Gemini SA about buying any part of the company, he said in an interview from Bangalore. "

Where do these rumours come from? All the above seemed 'mad' to me and most other observers. In the case of Atos and Capgemini, Infosys would dilute its eanings considerably and, in any case, seems quite capable of competing effectively organically with these companies. Sage, with its emphasis on SMEs, is well outside Infosys' large corporate marketplace.

Having said that, I expect Infosys to buy in Europe - medium sized companies with strategic opportunities. Eg IPR in product with a long services tail which can be offshored.

The papers today comment on a possible bid for Sage - either from Intuit or private equity. (Actually, one report suggested Infosys as a possible buyer - but that would just be plain daft!) As I hope readers will recall, I have long (like for at least the last 7 years now!) suggested that Intuit and Sage fit together like a hand in a glove. The geographic coverage is complementary and Intuit would take Sage coverage into the personal arena whereas Sage would extend Intuit further up the size chain.

I'd personally have liked Sage to buy Intuit - rather than the other way around. But I guess that is wishful thinking. I'd still hate to lose one of my two remaining "Boring" companies though.

A few weeks ago, JP Rangaswami (9th Sept 07 below) replied to a comment I had made on his blog about 'experts'. Basically he said he'd had enough of tech. 'experts' - what he wanted, more and more, were analysts he could 'trust'. Fortunately he put me in that category.

A few days ago the crisis of 'trust' blew up at Northern Rock just as I went on holiday. I have quite a lot more than the FSA guaranteed limit of c£30k so I felt a bit uneasy. As the days went by I began to feel positively sick. I tried every hour of the day to access my account on the Northern Rock website but failed - even at 3.00am in the morning. There seemed little I could do but wait and hope and pray. Last night HM Govt offered to guarantee all 'existing' deposits at Northern Rock of whatever value. I could breathe again.

There will be acres of news coverage around this story so I won't duplicate these. However, the episode really has smashed the faith I had in internet banking. I do everything on the internet and had never doubted its integrity before. But it was the fact that I couldn't get through to my account that really upset me. I think if I had been able to gain access immediately I might have left my money untouched. The fact that I couldn't drove me demented.

I also realised that I had no record of how much was in my account. I don't tend to print out a statement on every transaction - why should I? If Northern Rock's website had crashed forever, there was no way I could prove how much they owed me anyway.

I am very unsure how I can or will change the way I bank. But I can understand the feelings of the many retired people who were scared stiff that they would lose all their savings. They were right to panic. If I had had a branch-based account and hadn't been on holiday, I might have queued up to withdraw my money too.

Regardless, I - like them - have lost one thing in the last few days...TRUST. I doubt if it can be recovered. Certainly not for along time.

What are the stages in the "Rite of Passage" of something new getting into the mainstream?

For Facebook, the ticks on the "rites of paggage" list are coming thick and fast:

1 - A full page article on Mark Zuckerberg in the FT yesterday. How respectable is that?

2 - A "rumour" that Microsoft has bid $6b for Facebook. How "kiss of death" would that be?

and finally

3 - It gets a mention on the Archers. (Tom Archer casually mentions that he's on Facebook at the Young Farmers Ball on Tuesday) How really, really cool is that!

Since joining Facebook three months ago, I still get amazed at not only the other people who are members but how they use their "community".

I recently became Facebook friends with JP Rangaswami. Actually, I became "friends" with JP back in 1988 and we have met quite a few times since when he was CIO at DKW and now since his appointment as CIO at BT. As such JP is one of the most important CIOs around. But, more than that, JP is a breath of fresh air in an otherwise rather stuffy CIO world - as anyone who has heard JP speak will testify.

My Facebook friendship with JP led me to look at his blog "Confused of Calcutta". If you want a "damned good read" from one of the most respected guys around in the sector, you should at least take a look. Click here.

People question the value of such cyber social networks. They are, of course, no substitute for "real" networking. But, in the case of JP, that is exactly what re establishing contact with JP via Facebook has permitted. We will have a breakfast meeting together again soon! I'd put that down as another plus point of things I've got out of my experiment with Facebook.

Only yesterday i wrote, after the analysis of tech share performance in Aug, that tech had 'bucked the trends'. Amazingly tech has done well in a general market which has not. That is very unusual. In all my years, tech is an amplifier. Good times and tech does mega well. Bad times and tech suffers horrendously. Until now.

So it was with both interest and relief that I realised that I was not alone in coming to this conclusion. The latest (10th Sept 07) edition of Businessweek makes exactly that point with some very interesting insights.

You can read it Click here.

With all the volatility in the main markets, tech actually had a reasonably good August. As you can see both the NASDAQ and Techmark ended UP 2%. Software and IT services in the UK was flat but mobile telecomms shone - up 6.4%. Indeed, the strong performance in telecomms was repeated in Europe.

The YTD performance figures show an even greater dichotomy. FTSE100 barely higher than at the start of the year. But NASDAQ still showing a 7.5% gain and the UK's TechMark up a pretty impressive 12.2%. Interestingly, the Support Services sector has been the laggard this year - it (mainly because of the popularity of BPO) had been the star in recent previous years.

Very unusual for tech to buck the trend. It usually suffers MORE than - is amplified by - the wider market. Maybe the new paradigm is that people will default on the mortgage payments but still buy a new ipod?

My ICT Leaders speech for the Prince's Trust tonight - see post below - is entitled Power to the People. It's basic premise is that whereas in the first 20 years of my 40 year 'career' in ICT, 'Corporate IT' was firmly in control and responsible for all the new innovations, in the last 20 years the user/consumer has taken control. Indeed to the point where what the user/consumer does today will be adopted by corporate IT tomorrow. Of course, Corporate IT will try to "Ban it" at first - as they did with every new innovation over the last 20 years from mobile phones, GUIs, use of the internet, Google search, laptops, mobile access etc.

But 'Resistance is Futile'!

Tonight's speech homes in on Web 2.0 and Social Networking (eg Facebook) in particular and goes through the reasons why I agree with John Chambers (CEO of Cisco) that "The introduction of consumer-driven Web 2.0 technologies into businesses is set to usher in a new phase of productivity growth that could surpass that achieved during the late-1990s internet boom". Source - FT 15th July 07.

In my "State of the ICT Nation" speech back four years ago, I upset Microsoft with my "I used to drive a Microsoft. Now I fly a Google" speech. If you remember it was all about how the 'Desktop' had been replaced by the 'Webtop' and, whereas Microsoft "owned" by desktop, Google very clearly owned my Webtop. Indeed, if I look at my screen right now, Google still does! Everything I am doing from the 'look and feel' of the screen layout itself to writing my Blogspot, to my RSS feeds to my Desktop searches and application and document launches are all Google-powered. I am not alone. 88% of UK internet users use Google everyday.

But it is all about to change. The Webtop is being replaced by, for want of a better term, the "My Top". I am not suggesting for one moment that Facebook will become "My Top" (indeed there are many fkaws in the Facebook application) but it is a good start in describing what I mean.

I see 'My Top' as My Identity which puts me firmly in control. I log in and fire up My Top - something I can do on "Any Device, Any Where, Any Time " (Holway's ultimate Martini Moment!) It gives me access to my friends, my family, my business contacts, my company collegues etc. It gives me access to my own Knowledge Centre. It gives me access to all my documents, applications and key external stuff like my bank or where I shop. It is (scary I know!) ME. (That's the ME that is a Father, Grandfather, gardener, lake fell walker, chairman of various companies, IT analyst, tax payer, member of various societies, clubs and networks...I could go on. the point being that I exist separately in cyberspace for all these..and more. and that is daft as well as being highly unproductive. )

My Top exists in cyberspace and follows me around wherever I go - on my mobile, on my PC, on the TV. For that reason it is going to need some much better security than I have at the moment - fingerprint access or whatever.

The race to own the My Top is just starting. The prize is HUGE. A much bigger prize than that currently held by Google. It will change the face of computing and everything connected with it. To say it is the 'Next Big Thing' is to underestimate its size and implications.

But, if past reactions are anything to go by, the audience will initially be skeptical. Indeed, downright critical to the point of questioning Holway's sanity - again! But they keep coming back! I confidently predict that by the end of this decade the My Top will be as common place as the Webtop is today or GUI Desktop was in the 1990s

After all the planning, all the invitations, all the speech writing - tonight's the night for my biggie ICT Leaders speech for the Prince's Trust.

I've given my annual "State of the ICT Nation" speeches since 1988 (when I carried the 35mm slide deck and my projector up on the train). Every year the attendances got bigger and bigger. I think we had over 400 attendees in 1999. Soon after I decided to split it into an 'all-comers' event and a 'by invite only'. In 2001 I held my first ICT Leaders dinner at Mossimans when the guest list of ICT CEOs was a Who's Who of the industry.

After I helped to found the Prince's Trust Technology Leadership Group in 2002, I did these speeches to raise funds and awareness for them. The first was in Nov 2002 at Bloomberg and was perhaps my most "famous". 'IT's all over now?' was all about maturity of the sector and the forecast that growth rates would never again be in double figures and would be lucky to keep pace with GDP. Although much criticised at the time, it has come to pass and I don't know anybody who would take me on against that premise anymore.

I also moved my ICT Leaders Dinner to be on behalf of the Prince's Trust in 2005 when it was sponsored by BT - as it has been ever since. The series of Holway dinners and events since 2002 have raised around £600,000 to help the Prince's Trust help disadvantaged young people in the UK. On top of that many of the attendees at these dinners have become members or patrons of the Prince's Trust; helping the Technology Leaders Group to raise £5m in the last 5 years.

Tonight's event atop BT Tower is another sell out at £1250 per ticket. Everyone who is anybody in the UK ICT scene will be there.

A BIG THANKYOU to everyone who has helped to make it such a great success.

Back in the 70s and 80s, UK IT companies (that's when we had a UK-owned technology industry) used to go on the Milk Round each year attracting newcomers to their Graduate recruitment Programmes. Hundreds would join the main firms each year and go through an extensive induction programme lasting many months.

Post 2000, it was difficult to find any UK-based (let alone UK-owned) tech company that recruited or trained graduates. Applications for Computer Sciences degree courses slumped because it was not seen as a route to a decent job anymore. Hence the skill gap for people with 5-10 years experience that the industry currently suffers.

Last year, I lamblasted several leading UK IT companies for this short-sighted policy. One of these was the then CEO of Xansa - Alastair Cox. I remember him rising to his feet at a meeting saying that it was untrue - Xansa did recruit graduates. It was only after further questioning from me that he admitted that they were Indan graduates in India...not UK graduates in the UK!

Anyway, now we have the next twist in the tale. Infosys has just dispatched its first wave of 25 UK graduates for training in Mysore. As you can read in the FT article below.

I wasn't quite so fast on my feet a few weeks back when a member of the audience told me that I should be rejoicing because the number of Science graduates joining UK universities this year had increased for the first time since 2000. At first I welcomed that news. Then, after studying the figures in more detail, I found that the only reason for the increase was foreign students coming to the UK to study these subjects! Of course, that is to be welcomed too but it hardly shows that we turned the corner in making science more attractive to our own young people.

Infosys graduate trainees in Indian first
By Joe Leahy in Mumbai
FINANCIAL TIMES: August 30 2007

Infosys Technologies will on Friday dispatch its first group of UK graduate trainees to India for a six-month induction course as part of efforts by the country’s outsourcing companies to make their workforce more global.
The 25 trainees, each of whom has been issued with a copy of the Lonely Planet guide to India to help them orientate themselves in their new home, were hired from 12 UK universities as part of the programme, which follows a similar scheme in place for US graduates.
“We need to be able to get under the skin of our clients’ businesses and we think this programme will help us do that,” BG Srinivas, senior vice-president and head of Europe for Infosys, India’s second-largest information technology company, said.
The launch of the pilot scheme comes as Indian companies are looking to do more “insourcing” – recruiting locally in target markets to enable them to compete more effectively with the large, entrenched western global outsourcing majors.
Indian outsourcing companies have become expert at hiring armies of recruits at home but they need more people with a sophisticated understanding of the local culture and ways of business in their target markets.

Tata Consultancy Services, India’s largest computer services company, is also hiring foreign graduates and conducting internships for overseas students. Its non-Indian employees account for about 9.6 per cent of total staff while Infosys’s non-Indian staff is about 3 per cent.

Comscore's latest release of the top Internet sites visited in the UK in July 07 Click here shows Google top of the pile; used by 89% of all internet users in July.

I can't constantly update my slides for Tuesday but I note that Facebook has increased by 26% to 7.2m user in July. A mere 366% increase since the start of 2007. I made a prediction that, by the time I gave the presentation, Facebook usage would exceed 50m globally. Ie that's what i put on the slide sent to printers. I now think I'm pretty safe!