More IT wheeling and dealing

The acquisition of GeoCities by Yahoo!, in a deal valued at over $4.5 billion (including options), made international headlines last week. The deal puts the combined entity firmly at the top of the Internet access tree, ahead of AOL, which bought Netscape late last year and At Home, which only last week bought Excite. This deal also puts immense pressure on the other players such as Lycos and Infoseek, although the former has been making a series of small acquisitions.

At home, the overseas expansion news from Datatec made headlines. The move significantly enhances the company`s overseas portfolios, and presents the opportunity to create a major US presence, similar to the one it has already established in the UK.

• we saw excellent year-end results from MGX (income and revenue both well up);
• very good interim figures from Crux Technologies (revenue and income both well up);
• good interim earnings from the Connection Group (the significant imbalance in the growth of revenue and earnings may need watching);
• the publication of the abridged prospectus for Cyberhost, a company that intends to list on the venture capital market of the JSE in February;
• the announcement by Panama Technologies (PanTech), that it has created a new telecommunications company, PanTel, which it aims to list in March; and
• the publication of an abridged prospectus for Explorer Corporation Holdings, a company containing IT entities, which intends to list in February.

Additionally, and almost unnoticed, is the purchase by Comparex Holdings of the businesses of Sequent Computer Systems in Belgium, Germany and the Netherlands, together with sales responsibility for Austria, Portugal, Spain and Switzerland. This complements its Sequent business in South Africa, and comes on the back of some poor results from Sequent. I wonder if Sequent is not looking for a bigger buyout scenario? Its two major competitors, Tandem and Stratus, have been swallowed up by bigger groups over the past year or so.

[Local]

Local Cautionary Notices (see attachment)

Other local news:

• the resignation of the MD of Brainware, Kobus Louw, for health reasons;
• the appointment of Tim Humphreys-Davies as MD of MultiMedia Warehouse; and
• the announcement that ITI Technology opened a London office today.

• the announcement that Compaq plans an IPO for its Alta Vista Search Services, and its formation of a new business unit, Compaq.com, that will be responsible for selling products and services over the Internet and, no doubt, tying in Shopping.com which it has just bought; and
• Hitachi has agreed with EDS to assume full responsibility for Hitachi Data Systems, originally an EDS/Hitachi joint venture.

[International]

Other international news

• Ericsson's announcement that it will cut some 11 000 jobs;
• the news from Inprise, on the back of its latest poor quarterly results, that it will restructure, cutting some 20% of its workforce, and taking a Q1 charge to cover this activity;
• the surprise announcement that PeopleSoft will cut about 6% of its workforce, after posting indifferent quarterly numbers; and
• the publication of the latest FT500, the Financial Times` annual ranking of global firms, which now shows Microsoft to be the world`s most valuable business, having deposed General Electric from the number one slot.

We saw excellent figures from America Online, Axent, Broadcom (significantly above estimates), Broadvision (well back in the black), CGI Group, Clarify (better than expected), Consolidated Graphics, eBay (better than expected), EMC, FI Group, Foster Wheeler, IXOS Software, Lexmark, MindSpring Enterprises, Misys, New Era of Networks (better than expected), Nokia, Sapient, Siebel Systems (back in the black), Tellabs and Veritas Software.

Losses were reported by 8x8, Amazon.com (better than expected), AML Comms., Broadcast.com, CellStar, CyberCash (better than expected), Cypress Semiconductor, Diamond Multimedia Systems, Digital River, Egghead (but income well up), FileNet, Geoworks, ILOG, IMSI, Infoseek, Internet Security Systems, Intershop Comms AG, Iridium, JDA Software, Komag, Lam Research, MEMC (revenue also well down), M-Systems Flash Disk Pioneers, Mylex, NetGravity, Network peripherals, Northern Telecom, Open Text (revenue well up), Pervasive Software, RealNetworks (better than expected), S3, TelCom Semiconductor, Tower Semiconductor (revenue also well down), USWeb/CKS, Versant, VirtualFund.com, Vocaltec and Xicor.

Good numbers were recorded by 3Dfx Interactive (income flat but revenue well up), ALLTEL, Apex PC Solutions, AT&T (income well up but revenue only just up), BellSouth, Cadence Design Systems (better than expected), Comdisco, Compaq (better than expected), Computer Management Sciences, Computer Sciences, Creative Technology, Dendrite International, ESS Technology (back in the black), Filtronic, GTE, Informix (now back on track), Kronos (income and revenue well up), Macromedia (back in the black), Mapics, Mobius Management Systems, NetManage, SAP (income only up 14%), SCO, Secure Computing, Timberline Software and US West.

Satisfactory results came from Ericsson, Logitech International, Pitney Bowes, Remedy, Technitrol and Xerox.

Mediocre returns came from Adaptec (revenue and income down), Applix (income and revenue both flat), Banyan Systems, CFI ProServices, Digi International, Discreet Logic, Edify, HNC Software, Inprise, LSI Logic (income well down but revenue well up), Micrografx, Microsemi, Mitel, Novadigm, PairGain Technologies (revenue and income down), PeopleSoft (revenue well up and income well down, but below expectations), Ross Systems, Sony and STMicroelectronics (revenue and income static).

Very poor results were reported by Aspen Technology, Cognex, Digi International, Emulex (just in the black), Lockheed Martin, MTI Technology, QMS, Sequent (just in the black), Taiwan Semiconductor and Vantive (just in the black).

Other financial news included profit warnings from Ericsson, Inprise, Philips and Telxon (as well as a results delay pending a review of its books); share split announcements from AOL, IBM, Intel, Microsoft, Nokia and Sun Microsystems; and the formal announcement from CalComp that it has de-listed from Nasdaq. Today also sees the IPO of Perot Systems, a company that had revenues of over $780 million in 1997.

Locally

Compu-Clearing (+18.2%)
Datacentrix (+18.8%)
Dectronic (+18.2%)
E-Data (+35.3%)
Techcom (+28.1%)

Internationally

AOL (+25.1%)
CMG International (+28.9%)
CNET (+32%)
Excite (+34.9%)
Gateway (+23.6%)
JBA (+37.2%)
Lycos (+24.4%)
Mapics (-22.5%)
Misys (+31.5%)
Netscape (+23.3%)
New Era of Networks (+23.8%)
Yahoo! (+23.9%)

With many of the larger South African IT groups now generating the majority of their revenues overseas, it must be only a short while before we see them listing on one of the foreign stock exchanges. I suspect the first will come from Datatec, Dimension Data or Comparex.