Broad board reshuffling

The EDS/NTT discussions and KPMG Consulting`s name change dominated the international world of IT and telecommunications last week.

The worst recession this industry has ever known is having a profound impact on R&D investment.

Paul Booth, MD, Global Research Partners

At home, the changes at board level for several listed companies and the raft of local results stole much of the local ICT headline space.

• we saw satisfactory year-end numbers from ShawCell (revenue marginally down and earnings slightly up);
• disappointing year-end figures from Compu-Clearing (revenue up slightly and profit slightly down);
• full-year losses from Aqua Online (revenue also down) and EC Hold (18 months, but revenue significantly up);
• excellent interim figures from Datacentrix (revenue and earnings both well up);
• mediocre interim numbers from Cape Empowerment Trust (no revenue figures but attributable income well down), Dynamic Cables (revenue just up but earnings well down) and IST (revenue up a little and earnings marginally down); and
• very poor half-year numbers from Bytes Technology Group (but revenue well up and back in the black).

[Local]

Other local news included:

• the announcements of major reshuffle of the boards at AST, Dimension Data and Spescom;
• the creation of JMR Business and Technology Integration as an off-shoot of JMR Software; and
• the appointment of Ken Modise as acting CEO of SITA.

Furthermore, Botswana Telecom Authority (BTA) is being hailed as a potential world regulatory model following a speech by an ITU official, who suggested the BTA was on its way to becoming a standard bearer.

• discussions are taking place between EDS and NTT Comms re co-operation on data services;
• Change Technology Partners is seeking liquidation and dissolution;
• IT analyst firm Hurwitz Group has closed its doors;
• KPMG Consulting has changed its name to BearingPoint;
• EDS has ended its consulting alliance with PricewaterhouseCoopers;
• Infineon Technologies seems to have pulled out of its chip-manufacturing venture with Taiwanese-based Mosel Vitelic; and
• Mitsubishi Electric and Hitachi have formed a joint venture to focus on LSI operations.

Additionally, look out for the possibility of Hutchison Whampoa taking a stake in MobilCom AG; the possible acquisition of Commerce One by SAP, which already has a shareholding in the latter; and the outcome of the lawsuit instigated by New York`s attorney-general, who is suing five telecoms executives for allegedly profiteering from share offerings and false stock ratings to an amount in excess of $1 billion. The executives are the former CEO of WorldCom, the chairman and CEO of Qwest Comms, the chairman of Metromedia Fiber Networks and the CEO of McLeod USA.

[International]

Other international news included:

• the appointments of Betsy Barnard as CEO-elect of AT&T, following the completion of the merger of its cable arm with Comcast, Thierry Breton as CEO of France Telecom, Jeff Cramer as CEO of Anacomp, Jon Gorney as chairman and CEO of National Processing, John Judge as president and CEO of Crystal Decisions, Len Lauer as president of Sprint PCS operation, Terry Stinson as chairman and CEO of Xelus, and Dan Wilnai as interim CEO of CATC;
• the resignations of Jean-Louis Gassee as president and CEO of CATC, Leslie Rechan, president and COO of Onyx Software and Thomas Winsett, chairman and CEO of National Processing;
• the retirement of Charles Levine, president of Sprint PCS operation; and
• job loss announcements from Alcatel Canada, APC Telecom, BackWeb Technologies, Commerce One, Deutsche Telekom, Digi International, EMC, Leap Wireless, SchlumbergerSema, SmartForce, Teledesic, Universal Instruments, WM-Data AB and Xerox.

We saw good numbers from Charteris, CorVu (back in the black), Datatec Systems (back in the black), NAPCO Security Systems, SMARTS, Sophos and TogetherSoft; and satisfactory figures reported by Computer Services and Oce.

Very poor results came from Richardson Electronics (but back in the black).

Losses were posted by AISoftw@re SpA, API Electronics, ATI Technologies, InterVoice, MSB International, Novo Networks, NXT, Prosoft Training, Research in Motion, Triad Group, US Wireless, VI Group and Virtual Academics.

Other financial news included share buy-back announcements from Activision, Analytical Surveys (reverse), Cognos, DPAC Technologies, ePlus, Integrated Circuit Systems, Oplink Comms, PC Connection and PLX Technology.

There were also profit warnings from Advent Software, ARM Holdings, ATI Technologies, Avici, BackWeb Technologies, Charter Comms, Cirrus Logic, Digi International, EMC, EMS Technologies, Ericsson, Extreme Networks, FileNET, Handspring, Harmonic, InFocus, Information Holdings, InterNAP Network Services, Intershop, MatrixOne, Micrel, Micromuse, Network Associates, Pericom Semiconductor, Phoenix Technologies, Polycom, Primus Knowledge Solutions, Retek, SBA Comms, Sun Microsystems, Tetra Tech, TTI Telecom and Witness Systems

Share splits were announced by iBIZ (reverse), Palm (reverse) and Verilink (reverse); and a rights issue was announced by Bouygues Telecom. Additionally, Pan-Europe Comms NV plans to file for re-organisation purposes under Chapter 11 protection; CTC Comms Group has filed for a voluntary Chapter 11 filing; EDS is the subject of an informal enquiry by the SEC; and Datatec Systems is re-stating its 2000, 2001 and first three quarters of 2002.

Locally

Aqua Online (+14.3%)
BTG (+14.3%)
Cape Empowerment Trust (+25%)
Casey (-71.4%)
CCI Holdings (+400%)
Datatec (+16.5%)
Dectronic (-15.4%)
EC-Hold (+34.6%)
Elexir (-50%)
Global Technology (+55.6%)
Pinnacle (-21.4%)

Internationally

ARM Holdings (-66.7%)
CTC Comms Group (-57.9%)
Cypress Semiconductor (-42%)
DA Consulting Group (-41.7%)
NCD (+400%)
NTELOS (+50%)
PCD (+55.2%)
Pivotal (-60.5%)
SBA Comms (-64.3%)
Telewest Comms (+73.3%)

The worst recession this industry has ever known is having a profound impact on R&D investment. According to the UK`s Financial Times, of 30 companies investigated in Silicon Valley, more than half had reduced their investment, while only a third had increased it. On the negative side, the companies included Cisco, Oracle and Sun Microsystems, while Intel and Siebel Systems were on the positive side.

Furthermore, Business Week has released its boards ratings, which makes interesting reading. In terms of a technology presence, 3M, Intel and Texas Instruments are on the 'best` list; Apple, Qwest and Xerox are on the 'worst` list; Lucent Technologies and Computer Associates are on the 'most improved` list; and AMD, AT&T, HP and Microsoft are on the companies that 'need work` list. Need I say more?