Disturbing Datatec, DiData losses

The completion of the AT&T Broadband/Comcast merger and IBM`s R&D announcement dominated the international world of IT and telecommunications last week.

Last week saw the annual Comdex/Fall event in Las Vegas fall well short of the expected numbers of exhibitors and attendees, and well below those of 2001.

Paul Booth, MD, Global Research Partners

At home, the losses from Datatec and Dimension Data, and the second national telecoms operator (SNO) bid reaction from Eskom and Transtel stole much of the local ICT headline space.

* we saw good year-end figures from Reunert (revenue and earnings both up);
* mediocre annual figures from UCS (revenue up but earnings down);
* very poor year-end numbers from Paracon Holdings (revenue slightly down but earnings significantly down);
* full year losses from Dimension Data (revenue also down) and Spescom (revenue also down);
* very good half-year numbers from Labat Africa (revenues and earnings both well up);
* mediocre half-year numbers from Eureka (revenue well up but profit down);
* interim losses from Datatec (but revenue slightly up), Softline (but revenue well up) and Y3K (revenue also down significantly); and
* a Q3 loss from iTouch (but revenue up).

Additionally, the JSE has annotated I-Solutions` annual financial statements until clarification on the audit opinion is forthcoming, and Grintek has issued a 'veiled` profit warning.

[Local]

Other local news included:

* the start of a 'new life` for ERP.com following its JSE move from the venture capital sector to the main board (IT software and computer services sector);
* WebTec opened a Johannesburg office; and
* Eskom and Transtel`s negative reaction to the proposed two bids for the SNO.

* we saw the name change of Micronetics Wireless to Micronetics;
* Liberty Media pulled out from its proposed acquisition of Caesma NV;
* the completion of the Comcast/AT&T Broadband merger;
* the announcement that IBM is planning to shift $1 billion of its R&D budget away from traditional IT over the next three years and spend it on research related to consulting and computer services;
* the news that Qwest Comms had arranged a $12.9 billion debt exchange with its Qwest capital Funding subsidiary in an attempt to stave-off a cash squeeze and possible bankruptcy proceedings; and
* the vote for the Telia/Sonera merger exceeding the required percentage for the deal to go ahead.

Additionally, look out for the fate of AT&T Latin America following its massive Q3 loss; the outcome of the proposed IPO from Seagate Technologies, only two years since it was privatised for $1.8 billion; and the impact of a restructuring at MobilCom following a deal struck between France Telecom and MobilCom.

Last week also saw the publication of Business Week`s IT 100 six-monthly listing. The new top five are CACI (up from number 70 in June 2002), Intuit (up from 48), GTSI (up from 60), Synnex Technology International (up from 67) and eBay (up from 83). Other major movements came from mmO2 at seven (up from 89), Infosys Technologies at eight (up from 71), Tele2 at 10 (up from 91) and Samsung at 37 (down from number one). The big names losing ground include Apple, Dell, IBM, Intel and SAP.

[International]

Other international news included:

* the appointments of Walter Alessandrini as CEO of Avanex, Ned Barnholt as chairman of Agilent Technologies, Robert Flynn as CEO of Liquid Audio, Kendall Hunt as CEO of Vasco Data Security, Sanjay Kumar as chairman of Computer Associates, Jeffrey Lapin as CEO of Take-Two Interactive Software, Edwin Miller as CEO of Infodata, Kirk Raab as chairman of Applied Imaging, Jan Valcke as president and COO of Vasco Data Security, and Chris Vargas as CEO of Proficient Networks;
* the resignations of Hank Bonde, COO of JD Edwards; Louis Gerstner as chairman of IBM; Mari Houthooft, president and CEO of Vasco Data Security; Gerry Kearby, CEO of Liquid Audio; and Afshin Mohebbi as president and COO of Qwest Comms;
* the retirement of Charles Wang, founder and chairman of Computer Associates; and
* job loss announcements from AOL, Brocade Comms, Cap Gemini Ernst & Young, NCR, Novo Group, Pericom Semiconductor and Xerox.

We saw excellent* figures from OmniVision (back in the black) and VimpelCom.

Good numbers* were recorded by Brocade Comms (back in the black), Cavalier Telecom, Circa, City Telecom Hong Kong, Daktronics, HP and YAK Comms.

Satisfactory* figures were posted by American Software, Analog Devices, Datawatch (back in the black), Docucorp, Global Maintech, Innovative Solutions & Support, NTT (back in the black), Telekom Austria and Ultimate Electronics.

Mediocre* returns came from C&D Technologies, Infodata Systems (but back in the black), Learning Tree, Logility, PhotoWorks, Serena Software, Swisscom AG and XETA Technologies; while very poor results* came from Lason and SYS Technologies.

Losses* were reported by Acorn Holdings, Agile Software, Agilent Technologies, Ansoft, ASAT Holdings, Autodesk, BestNet, Blue Coat Systems, Brooks-PRI Automation, CanWest Global, Cimatron, Cognicase, Convera, Crystal Systems Solutions, Dataram, Ditech Comms, Eltek, eMagin, Epic Data, Gadzooks, Global Network, I-Link, IFX, Imagination Technologies, Industri-Matematik International, INRAD, IQE, Intelligence AG, Level 8 Systems, LTWC, Marvell Technology Group, Microsemi, MmO2, Net Servicos, NetManage, Novell, Novo Networks, Orbis AG, Portal Software, Proginet, PSC, PSI AG, Pumatech, Redstone, Scitex, Spescom Software (ex Altris Software), Starbase, Stratos Lightwave, SVI Solutions, TenFold, TGFIN Holdings, The Innovation Group, TiVo, Unify, USA Technologies, VA Software and ViryaNet.

Other financial news included share buy-back announcements from Oplink, Opsware, RoboGroup, Stratasys, Surge Components and Tripath Technology; profit warnings from AMD, BellSouth, Brocade Comms, Infineon and Xerox; share split announcements from Verilink (reverse) and Vsource (reverse); and a good IPO from Impac Medical (IT systems provider). Additionally, Charter Comms is to re-state its 2000 and 2001 results.

Locally

Aqua Online (+66.7%)
Crux (-20%)
Digicore (+13%)
EOH (+12.2%)
Eureka (-25%)
Faritec (-16.7%)
Grintek (-16.7%)
OSI (+150%)
Paracon (+19.6%)
Pinnacle (-33.3%)

Internationally

Arch Wireless (+55.2%)
ChipPAC (+52.2%)
Dataram (+50.4%)

Dobson Comms (+68.2%)
eGain (+50%)
IDN Telecom (+50%)
Inktomi (+76.4%)
Portal Software (+53.2%)
PSC (-87.5%)
Stratex Networks (+47.1%)

Last week saw the annual Comdex/Fall event in Las Vegas fall well short of the expected numbers of exhibitors and attendees, and well below those of 2001. This downturn has added to the woes of its organiser, Key3Media, which only recently recorded a significant quarterly loss of over $300 million, and is now exploring various options that may include a bankruptcy filing.

* 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.

* Excellent: Both revenue and net income growth is in excess of 50%.
* Good: Both revenue and net income growth is 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.