Danish duo takes on mid-range market

The multi-billion purchase of a stake in AT&T Wireless by NTT DoCoMo and the deals involving France Telecom and Equant NV dominated the international world of IT and telecommunications last week.

Damgaard did have a fleeting flutter with the South African market last year, but it was very short-lived.

Paul Booth, MD, Global Research Partners

At home, the publication of the government`s Green Paper on e-commerce stole much of the local headline space.

• we saw very good interim results from M-Cell (revenue and earnings both well up);
• satisfactory interim numbers from Labat Africa (revenue more than doubled, but income only up 16.7% and less than half of last year`s full numbers);
• poor interim figures from Eureka Industrial (includes Computermatic and Y3K within its group) and Community Technologies (but back in the black - just).

Additionally, the e-commerce Green Paper doesn`t seem to contain any definite policies and raises a number of issues in order to solicit input from the private sector and end-users. I suspect it will be several months before any further progress materialises with this very emotive topic.

[Local]

Other local news included:

• the resignation of Richard Fearon as an executive director of Venture Computer (but he still remains as a non-executive director with communications and technology portfolios for Venture Computer via his new company, Cameo Corporate Communications);
• the resignation of AJJ van der Swan as chairman of Y3K;
• the announcement of a restructuring at Datatec`s Logical that is likely to see some job losses; and
• the realignment of the software divisions of SDD/OTG and Workgroup, and the split of Informix SA into two separate trading entities.

• we saw the announcement by Frontline Comms of a major restructuring;
• the departure of two senior executives from LSI Logic;
• the creation of a new company by Ericsson to focus on and market its Bluetooth technology; and
• the news that Corel may well exit the Linux market.

Additionally, the troubles at Lernout & Haupsie don`t seem to be dying down; last week three directors resigned from the board and the financial irregularity investigations seem to have been escalated into a formal probe.

There was also the merger of two Danish companies that focus on the mid-range market, Damgaard (28%) and Navision (72%). The Navision/Damgaard merger potentially escalates the newly formed company up the enterprise resource planning rankings, but this is a sector that has been in significant turmoil during the last 12 to 18 months with significant casualties. However, it now becomes a potential player in the mid-range market alongside such companies as Great Plains, Infor Business Solutions and Lawson Software. Damgaard did have a fleeting flutter with the South African market last year, but it was very short-lived.

The recent very poor Q4 set of results from Novell sent its shares into a tailspin yet again last week, dropping to below $6 from a high of over $44 in February. Despite several and persistent rumours, it has not yet been acquired, but has often been associated with some of the major names in the IT business such as IBM. With its recent results and its very poor last 12 months (revenue down 21% and earnings down fourfold), its market capitalisation is now down to below $2 billion, and presents an opportunity for access to a substantial user-base to be purchased very cheaply. The next few months could be worth watching with respect to its survival.

[International]

Other international news included:

• the resignations of Alan Anderson, chairman and CEO of Quintus, Robert Evans, COO of i2 Technologies (ex-CEO of Aspect development, acquired by i2), William Gibson, founder and chairman of Manugistics, and Jim Huser, COO and executive VP of US Interactive; and
• job loss announcements from Framfab, Frontline Comms and ICL.

We saw excellent figures from 3i Group, Epcos AG, Kyocera, OmniVision, Portal Software (back in the black) and Tundra Semiconductor.

Losses came from BrightStar Information Technology Group, CacheFlow, Crayfish, Datawatch, DCTI, Descartes Systems Group, DTS, eGlobe, Elcotel, Excalibur Technologies, Global Med Technologies, IFX, Intelliquis International, Intuit, Invensys, Lason, Log On America, Lotus Pacific, Matav Cable Systems Media, MAX Internet Comms, Memotec Comms, Merisel, MPSI Systems, MyWeb, nCipher, Netgateway, Novell, Peerless Systems, PRI Automation, PSC, Pumatech and Ubizen NV.

Good numbers were recorded by Agilent Technologies, C & D Technologies, Calian Technology, MTS Systems, Nikon and Ultimate Electronics. Satisfactory figures were reported by LanVision Systems (back in the black).

Mediocre returns came from Cumberland Technologies, NTT, RM and Softbank (but back in the black); while very poor results came from Digital Video Systems, Formula Systems, ForSoft and Reliant Interactive.

Other financial news included profit warnings from Acer, Antec, Avnet, Commerce One, Frontline Comms (restructuring costs), Getronics, ITNet, Nettec, Northpoint Comms Group, Sagem and Sema Group; and disappointing IPOs from Alliance Fiber, Gericom AG, Group Technologies AG, ImagicTV and Telekom Austria.

Additionally, Lucent Technologies is to restate its Q4 numbers, knocking at least $125 million of its revenue, and is warning about its projections for the current quarter.

Locally

Advtech (+43.5%)
Core (-44.4%)
I-Tech (+42.9%)
Infowave (-30%)
MMW (+30%)
OSI (+23.1%)
Paradigm (-29.7%)
Prism (-22.7%)
Smacsoft (+74.4%)
Softline (-23.1%)
UAM (-30.9%)

Internationally

Atlantic Telecom (-34.7%)
CacheFlow (-62.9%)
Covad Comms (-33.3%)
Fibernet Group (-41.4%)
Filtronic (-40.1%)
Inktomi (-37.6%)
Mercator Software (-36.4%)
marchFIRST (-46.8%)
Network Systems International (+33.6)
New Era of Networks (-69.1%)
Portal Software (-58.5%)
Sema Group (-49.7%)
SVI (-32.4%)

Business Week has just released its semi-annual IT update, "The Info Tech 100", which makes very interesting reading. At number one is Sanmina up from number 85 in June, followed by NVIDIA, Network Appliance and Micromuse (up from number 95). Other significant changes include Nokia at 56 (was number one), Oracle at 61 (was third) and Taiwan Semiconductor at 67 (was fifth).