Mega deal, more accounting scandals

IBM`s $3.5 billion purchase of PwC Consulting and the arrest of two former senior executives at WorldCom dominated the international world of IT and telecommunications last week.

We need the SNO and the potential competition it brings against Telkom as soon as possible.

Paul Booth, MD, Global Research Partners

At home, the announcement of ICASA`s choice for the empowerment partner in the second national telecoms operator (SNO) took much of the local ICT headline space.

* we saw full-year losses from Interconnective Solutions (revenue also well down) and Zaptronix (revenue also well down).

[Local]

Other local news included:

* the announcement that Beget Holdings is to list on the JSE in September, the first new technology listing since August 2000, when Sempres International (now defunct) came to the market;

* the announcement that the disposal of the remaining assets of Crux had still not been finalised;

* the appointment of Nomazizi Mtshotshisa as chairman of Telkom; and

* the announcement from ICASA that, subject to government approval, the tender for the 19% empowerment share in the second national operator has been awarded to Nexus.

* we saw WorldCom delist from Nasdaq, the arrest of two of its former financial executives and the appointment of two turnaround specialists to lead the effort of extricating it from Chapter 11; and

* France Telecoms sold its remaining stake in ST Microelectronics.

Additionally, look out for the winner in the battle for Williams Comms, which is currently operating under Chapter 11; the possible entry into Chapter 11 by Ziff Davis Media; and the buyer for ADC`s optical business.

The take-over of PwC Consulting by IBM adds substantially to the world`s number one computer services group. It inherits some 30 000 employees, including 1 300 partners, and a revenue of around $4.9 billion per year. This strategic move, ahead of a planned initial public offering (IPO) by PwC Consulting, significantly distances IBM from its rivals such as the newly formed HP/Compaq entity. HP turned down the opportunity of acquiring PwC Consulting on at least two occasions. Locally, there are some 250 employees at PwC Consulting and about 300 in total in Africa.

[International]

Other international news included:

* the appointments of Fred Amoroso as president and CEO of Meta Group, Henry Ancona as president and COO of Pegasystems, Richard Belluzzo as CEO of Quantum, Charles Burdick as CEO of Telewest, and Craig Sonderquist as president and CEO of Core Networks;

* the resignations of Michael Brown, CEO of Quantum; Strone Macpherson, executive deputy chairman of Misys; Thomas Middelhoff, chairman and CEO of Bertelsmann AG; Diaz Nesamoney, president and COO of Informatica; Cosmo Santullo, CEO of SonicWALL; Adam Singer, CEO of Telewest; and Stephen Schwartz as president and CEO of Asyst technologies; and

* job loss announcements from ADC Comms, AT&T Canada, Brooks-PRI Automation, Cognex, Data I/O, EDS, Emblaze Systems, Epcos, HP, Siemens, Tvia and WebGain.

We saw excellent figures from ACS and O2 Micro.

Good numbers were recorded by ActionPoint (back in the black), Applied Imaging (back in the black), Bisys, Ciber, Concord EFS, Cray (back in the black), Datawatch, EMS Technologies, Group 1 Software, Hytek, Image Sensing Systems (back in the black), Linedata Services SA, Merge Technologies, MTC Technologies, Nortech Systems, ON Technology (back in the black), Optelecom, Paravant, Perot Systems, Radware (back in the black), Royalblue Group, Sharp, Siliconix, STET Hellas Telecomms SA, SureWest Comms, Synaptics, Tekelec (back in the black), Trend Micro, UMC (back in the black) and Vishay Intertechnology.

Satisfactory figures were posted by AMX, Axis Comms (back in the black), Bogen Comms, Cobra Electronics, CSC, Imagistics, Infinite Graphics (back in the black), Intergraph, John H Harland, Macrovision, Matsushita (back in the black), MEMC Electronic Materials (back in the black), Nam Tai Electronics (back in the black), Open Text, RCM Technologies, TDK, Transact Technologies (back in the black), Tyler Technologies and Witness Systems (back in the black).

Mediocre returns came from APAC Customer Services (back in the black), APC, AXS-One (back in the black), Cadmus Comms (back in the black), Canon, CompuDyne, CSG System), International, CT Comms, FEI, FlexiInternational Software, Gensym (back in the black), Glentel (back in the black), HickoryTech, Ingram Micro (back in the black), Innotrac, KLA-Tencor, M-Wave, Maximus, Merisel (back in the black), MicroStrategy (back in the black), Mitsubishi Electric (back in the black), New Skies Satellites NV, NIIT, Opnet Technologies, Pioneer, Sykes Enterprises, TACT (back in the black), Telus, Transaction Systems Architects and Unova (back in the black).

Very poor results were reported by Madge Networks and NICE Systems (back in the black).

Losses came from Acterna, Adept Technology, Affordable Telecomms Technology, AirNet Comms, Allegiance Telecom, Allen Telecom, Alliance Imaging, AlphaNet Solutions, Alvarion, Amkor Technology, AML Comms, Anadigics, Answerthink, AOL Latin America, APA Optics, Arrow Electronics, Avanex, Aware, Axeda, Axsys Technologies, Billserv, Bitstream, Bookham Technology, Brightpoint, Call-Net, Cell Network AB, ChipPAC, ClickSoftware Technologies, Comcast, CommScope, Communications Intelligence, Computer Horizons, Concur Technologies, Cox Comms, Cree, CSP, CyberOptics, divine, EarthLink, Elcom International, Emcore, Euronet Worldwide, Evolve Software, Evolving Systems, Extended Systems, Exult, First Virtual Comms, FreeMarkets, Gadzoox Networks, General Magic, Giga-tronics, Go America, Hanaro Telecom, Hitachi, Ibis Technology, Icon Medialab AB, I.D.Systems, Ilog, ImageMax, Input/Output, Interlink Electronics, Intershop Comms AG, InterTrust Technologies, ION Networks, JNI, LanOptics, Lante, LightPath Technologies, Loral, Macronix, Maxcom Telecomunicaciones, Maxwell technologies, McLeodUSA, MCT, MDSI Mobile Data Systems, Mercator Software, Micromuse, MKS Instruments, Mobility Electronics, Moldflow, Net Perceptions, NIC, Numerex, Oplink Comms, Optical Communication Products, PCD, Pegasus Solutions, Perficient, Pinnacle Systems, Plaintree Systems, PSi Technologies, QRS, Radyne ComStream, Read-Rite, RiT Technologies, S1, Sagent Technology, SatCon Technology, ScreamingMedia, Segue Software, SimpleTech, Skyworks, SoftNet Systems, SONICblue, SPSS, ST Assembly Test Services, Starbase, Stellent, Stonesoft, Storage Engine, SureBeam, Symmetricom, Synquest, TeleCommunication Systems, Telenetics, Terayon, Time Warner Telecom, TMNG, Toshiba, Touch America, Tower Semiconductor, Transmation, Tricom, Tricord, TTM Technologies, V-One, ValiCert, Veeco Instruments, Verizon Comms, Viewpoint, VTEL, Vyyo, Wire One Technologies, WorldGate Comms, WorldQuest networks, Xcelera and Zarlink Semiconductor.

Other financial news included share buy-back announcements from Bottomline Technologies, Entrust, Mapics, MapInfo, Molex, Plantronics, Rogue Wave Software, Samsung, Siebel Systems, TeleTech and Vitria Technology.

There were also profit warnings from Adobe, Amkor, Caminus, Canon, ChipPAC, Citrix Systems, Dot Hill Systems, EarthLink, Eyretel, Gemplus, London Bridge Software Holdings, Micromuse, National Semiconductor, Nvidia, Plato Learning, UMC, Veeco Instruments, Verizon Comms and Wind River Systems.

There was also share split announcement from Sagent (reverse); a delayed IPO from AT&T/AOL Time Warner for the AT&T stake in Time Warner Entertainment; a cancelled IPO from Zero-Knowledge Systems, a Canadian Internet security firm; and the cancellation of the planned IPO by PwC Consulting following its purchase by IBM.

Additionally, there are more accounting scandals creeping out of the woodwork, with Qwest admitting that it incorrectly recognised optical-capacity revenue of $1.16 billion in the years 1999-2001, Enterasys re-stating last year`s results; AOL Time Warner now under judicial investigations; and Satyam Computer Services also under financial investigation. Tricord also filed for Chapter 11 protection.

Locally

Aqua Online (+50%)
Crux (-50%)
Dectronic (-11.1%)
Dimension Data (-17.7%)
Hicor (-66.7%)
Idion (-29.2%)
Infowave (+13.6%)
Pinnacle (+30%)
SetPoint (+33.3%)
ShawCell (-41.2%)

Internationally

Alcatel Optronics (+49.4%)
Butler International (-42.9%)
CTC Comms Group (-82%)
Elcom International (+38.8%)
Geoworks (-41.4%)
London Bridge Software (-47.6%)
Madge Networks (+43.8%)
NCD (+40%)
Rural Cellular (+58.4%)
VerticalNet (+75.8%)

Let`s hope the empowerment award for the SNO to Nexus doesn`t lead to acrimony and legal wrangling in the courts, as was the case with the awarding of the third cellular licence. We need the SNO and the potential competition it brings against Telkom as soon as possible.