A week of SNO squabbling

The anticipated European Commission ruling against Microsoft and the sell-off by EDS of its UGS PLM Solution unit for over $2 billion dominated the international world of IT and telecommunications last week.

This week should see the European Commission`s (EC) ruling re Microsoft`s alleged monopolistic practices, a verdict which I am certain will be further challenged by Microsoft.

Paul Booth, MD, Global Research Partners

At home, Dimension Data`s sell-off of Proxicom (I mentioned this last week) and the continued 'squabbling` among the second national operator (SNO) shareholders stole much of the local ICT headline space.

* We saw good interim figures from Digicore (revenue and earnings both up);
* Full-year losses from Idion (revenue also down) and iTouch (although revenue well up);
* A positive earnings/profit warning from MTN Group;
* Negative earning/profit warnings from Beget Holdings and Stella Vista; and
* The suspension of Aqua Online`s shares.

Other local news included:

* The establishment of Lava Systems Africa;
* Another black economic empowerment initiative from Spescom involving Momotheka Trading;
* The appointments of Arthur Brown as CEO of Software Futures, Sifiso Dabengwa as group COO of the MTN Group, Vaughan Diedrick as MD of Software Futures, Paddy Govender as MD of Cosis, Fred Lu as MD of Corex IT Distribution Dynamics and Ben Ngulube as president of the SAIEE, a subsidiary of SIS Holdings;
* The name change of Comparex to Business Connexion;
* The withdrawal by Norwegian Telecom Management Partners from the Two Consortium, one of the shareholders of the SNO; and
* The departure of Henry Ferreira, SA country manager of HP, to take up a position at HP UK.

New local distributorships included that of Innovatek by Synapsys, while Comparex announced a new strategic business alliance with e.com institute.

* We saw the announcement from Brazil`s anti-trust agency that Telecom Italia must withdraw from the Brasil Telecom control group.

International strategic partnerships were announced between Copper Mountain Networks and Ericsson re the evolution of broadband networks.

Additionally, look out for the buyer of RAG Informatik GmbH, the IT services arm of RAG Aktiengesellschaft, one of the top 15 IT service providers in Germany, and of Saardata GmbH, which it also owns; and for the spin-off of the international operations of Liberty Media.

International acquisitions, mergers, joint ventures etc.

Other international news included:

* The appointments of Carlo Bozotti as CEO of STMicroelectronics (as from next year), Douglas Catalano as chairman, president and CEO of enherent, Ian Giffen as chairman of 724 Solutions, Nicholas Katzenbach as non-executive chairman of MCI, Douglas Mellinger as vice-chairman of enherent, Richard Roedel as chairman of Take-Two Interactive Software and Michael Tennenbaum as chairman of Anacomp;
* The resignations of Ryan Brant as chairman and founder of Take-Two Interactive Software, Pasquale Pistorio as CEO of STMicroelectronics as from next year and Rick Roscitt as president and COO of MCI;
* The retirements of Jack Abrams as president and CEO of Nikon and Phil Smoot as chairman of Anacomp; and
* Job loss announcements from IXOS Software AG and Legend Group.

We saw excellent* figures from Auto-Graphics (back in the black) and Innodata Isogen (back in the black); and very good* numbers from Adobe, Entegris and Global Payments.

Good figures* were recorded by Carreker (back in the black), China Mobile, China Telecom, Computacenter, IDT (back in the black), Intermagnetics, Jabil Circuit, Lawson Software (back in the black), Paychex, Premier Farnell, RCM Technologies (back in the black), Staffware, Spectrum Control, Tektronix (back in the black), Tibco Software, TOM Group (back in the black) and UnitedGlobalCom (back in the black); and satisfactory* ones by Applied Digital Solutions (but back in the black), Bogen Comms (back in the black), Hutchison Whampoa, Infocrossing, Metrocall Wireless, Norstan, Peerless Systems, Progress Software, RF Monolithics and Sigma Designs.

Mediocre* returns came from C&D Technologies, D&E Comms, Digital Fusion (but back in the black), Evans & Sutherland (but back in the black), Harvey Electronics, InfoNow, PalmSource and Pink Roccade NV; while very poor results* came from All American Semiconductor and SI Technologies.

Losses* came from 3Com, Andrea Electronics, Applied Imaging, Centennial Comms, Digital Power, e-SIM, Exabyte, FreeStar Technology, Hytek Microsystems, Insituform Technologies, InterCept, IP2IPO, ITEX, Knology, MSX International, NaviSite, Nortech Systems, NTN Comms, ORBIT/FR, Paragon Technologies, Parity, PowerLinx, Saba Software, Solectron, Taitron Components, TeraForce Technologies, Vivendi, WPCS, XO Comms and Zi.

Other financial news included analyst upgrades for Adobe, Ciena, Linear Technology and Plexus; analyst downgrades for Avici Systems and CSC; private placement of shares by Maven Networks and Yak Comms; share offerings from China Telecom, Transaction Network Services and Trident Microsystems; private funding obtained for Skype, a telecommunications software company; and a share buy-back announcement from Micrel.

There were also positive results/profit warnings from Canon and Intellisync; negative results/profit warnings (often veiled) from Agere Systems, Carreker, CSG Systems, Enterasys, Hutchison Whampoa, O2Micro International, Planar Systems and Saba Software; share split announcements from Intrusion (reverse 4:1) and Nematron (reverse 5:1); a planned IPO on Frankfurt from silicon wafer producer Siltronic; satisfactory IPOs from Eircom and TNS, a provider of comms services for ATMs; and a disappointing IPO from SMIC. Additionally, Veritas Software is to re-state its 2001 and 2002 results, and revise its numbers for 2003.

Locally

AST (-21%)
CS Holdings (-11.1%)
Datatec (+9.5%)
Elexir (-33.3%)
Eureka (-7.7%)
Faritec (+11.1%)
I-Solutions (-10%)
Labat Africa (+10.7%)
Trematon (+11.1%)
Zaptronix (+50%)

Internationally

Activision (-30.9%)
All American Semiconductor (-23.7%)
Entrada Networks (+66.7%)
Enherent (-21.7%)
Enterasys (-21.7%)
Gilat Satellite Networks (+20.5%)
Island Pacific (-23.5%)
Nortech Systems (-26.9%)
Rainmaker Systems (+43.7%)
Visual Data (+28.5%)

In terms of indices, Nasdaq was down 2.2% and the JSE up 0.5% for the week.

This week should see the European Commission`s (EC) ruling re Microsoft`s alleged monopolistic practices, a verdict which I am certain will be further challenged by Microsoft. The ruling follows the breakdown of the talks held last week between the EC and Microsoft aimed at finding a mutably acceptable settlement.

* NB

Guidelines for the categorisation of results are as follows and are always in comparison with the equivalent period for the previous year; pro forma numbers are ignored (the terminology may vary slightly from country to country).

* Excellent: Both revenue and net income growth are in excess of 50%.
* Very good: Both revenue and net income growth are in excess of 25%
* Good: Both revenue and net income growth are in excess of 10%.
* Satisfactory: Revenue is within 10% of previous year and net income is up.
* Mediocre: Either revenue and/or net income is down.
* Very poor: Net income is less than 1% of revenue.
* Loss: A loss has been recorded.