Fighting for control

The battle for control of Frontier Communications and US West by Qwest Communications International and Global Crossing dominated the international IT world last week. At home, the Altron bid for Reunert and the final fate for Brainware, which again might be Altron, made the most headlines.

This could be one situation that remains very fluid until the ink has dried on the contracts.

The Qwest/Global Crossing battle was triggered by a hostile bid from the former at the beginning of last week. Late on Friday it seemed as if the situation was as it was originally with Frontier rejecting the Qwest bid and no indication that US West was going to change its mind. I`m not yet convinced that the current situation will remain, since there has been significant share price movements among the various players. This could be one situation that remains very fluid until the ink has dried on the contracts.

• we saw the successful listing of Labat Africa, which includes a major IT focus, in the venture capital sector of the JSE;
• the announcement of M-Web`s full year numbers which included a significant loss approaching R200 million; and
• the news that Top-Tech will transfer to the main board on 5 July.

[Local]

Local Cautionary Notices (see attachment).

Local Listing calendar (see attachment).

Other local news included:

• the drop in the share price at the close last Friday, of recently listed CIH and Infiniti to new 52-week lows, and
• Dectronic, newly-listed Stella Vista and WenTech to very low figures and close to all-time lows.

• we saw the very successful debut of the Australian Internet company, ecorp, on the Australian Stock Exchange. This company owns the country`s largest ticketing agency (Ticketek), an Internet stockbroking firm (Online Broker Holdings), and has 50% interests in joint ventures with both Microsoft (ninemsn) and eBay (eBay A&NZ).

[International ]

Other international news included:

• the announcement that the president of Nortel Networks, Dave House, will leave the company by the end of August 1999;
• that the president and COO of Autodesk will retire shortly;
• that yet another senior Compaq executive (executive VP of HR) has resigned; and
• the news that Siemens and Fujitsu have signed a worldwide co-operation pact including a joint venture (Fujitsu Siemens Computers) that will rank as Europe`s second largest computer operation.

We saw excellent figures from Solectron. Losses came from Calluna, Datapoint, Elcotel and SCB Computer Technology.

Good numbers were recorded by Adobe, Jabil Circuit, Oracle (better than expected, but will still cut some 1% of its workforce), Progress Software, SVI Holdings (part of the South African Softline Group) and Vertex Industries (back in the black). Satisfactory results were reported by Cedar Group, Dense-Pac Microsystems (back in the black) and Highams Systems Services Group.

Mediocre returns came from Software Spectrum and very poor results came from Standard Microsystems and Wegener.

Other financial news included profit warnings from BMC Software (various charges re acquisitions and loss of jobs), Compaq (loss expected due to re-structuring costs), Exabyte (loss expected), Jabil Circuit, Maxtor, Iomega (re-structuring charge through loss of 450 jobs) and Telxon (significant loss expected, and Q2 numbers to be stated for a second time!) and Western Digital. Following its recent losses, System Software Associates has announced that it will be shedding between 15% and 20% of its workforce. Additionally, Iridium says it will cut its workforce by 15%. Both of these companies will take charges to cover these events in their next quarter`s numbers.

Locally

Aquila (+18.8%)
Casey (-16.7%)
Central Information Holdings (-21.7%)
Connection Group (-23.3%)
Dectronic (-20.8%)
Stella Vista (-28.6%)
WenTech (-20%)
Whetstone (-21.8%)

Internationally

Adobe (+21.6%)
Applix (+36.8%)
At Home (-39%)
Corel (+30.2%)
Exabyte (-23.1%)
Forte (+41.8%)
Inktomi (+25.9%)
Iridium (+29.2%)
Manugistics (+27.2%)
Oracle (+38.5%)
Ortel (+25.9%)
S3 (+40%)

Scan-Optics (+22.2%)
Verity (+23.9%)

The latest issue of Business Week featured its Information Technology 100, which saw America Online in top position (unexpectedly), followed by Dell, Solectron, UK`s Vodafone Group (one of Vodacom`s major shareholders) and Cisco. Other surprising positions were Microsoft at number 10 (a higher rating was expected) Lexmark at 11 and SAP down at 48th place.