More WorldCom revelations

Yet another financial revelation from WorldCom and the news of a significant WorldCom sales dip in Europe and the news of the fate of bankrupt Global Crossing dominated the international world of IT and telecommunications last week.

At home, the Idion results and the news from AST stole much of the local ICT headline space during a quiet and shortened week.

We saw an interim loss from Idion (but revenue well up); and a profit warning from AST.

Outsourcing is the dominant "technology" trend in the current environment, which is unlikely to improve significantly before late 2003 or early 2004.

Paul Booth, MD, Global Research Partners

Additionally, it was announced that Cape Empowerment Trust`s annual financial statements contain an emphasis of matter paragraph relating to a significant uncertainty, and thus the company`s listing has been annotated appropriately.

[Local]

Other local news included:

AST`s discovery of a "significant" loss within its Namibian operations; and the renewed cautionary by Comparex indicating that the newly reconstructed board has, as yet, not finished its strategic review of the company.

* we saw WorldCom confessing to even more improperly recorded revenue (another $3.3 billion) and a warning that even more restatements and massive write-offs could be coming;

* the announcement from Wyse Technology that it would spin-off its software division into a separate company called Rapport Technologies;

* the name change of TDT Development to Stronghold Technologies;

* the appointment of a new turn-around management team at AIT;

* the filing of charges against EConnect CEO Thomas Hughes and the company for allegedly scheming to artificially inflate the company`s stock price;

* the removal of Palm from the S&P 500 index;

* the sale by the Czech government of a 51% stake in Cesky Telecom to a consortium that includes Deutsche Bank and TDC of Denmark; and

* the news that Hutchison Telecomms and Singapore Technologies Telemedia have won the bid for a 61.5% interest ($750 million deal) in the newly constituted Global Crossing on its emergence from bankruptcy.

Additionally, look out for a possible sale of WorldCom`s European arm, whose sales have dipped over 50% since its US parent filed for Chapter 11; and the possible departure from SAP of its last remaining founder, Hasso Plattner.

[International]

Other international news included:

* the appointments of Neal Ater as CEO of Jibe, Thomas Arthur as CEO of Aladdin Knowledge Systems, Gregory Ballard as interim CEO of SONICblue, Gary Dickerson as president of KLA-Tencor, Kim Kelly as president and COO of Insight Comms, Jon Miller as CEO of the AOL division of AOL Time Warner, Sanders Partee as president and CEO of Ecutel, Nicholas Randall as CEO of AIT, Coleman Sisson as CEO of Liberate Technologies and Bruce Turner as CEO of Gtech;

* the resignations of Derek Bonham, chairman of Marconi; Howard Cohen, president and CEO of Gtech; Bruce Graham, CEO of Interliant; Kenneth Potashner, chairman, president and CEO of SONICblue; and Arthur Smith, chairman and CEO of ATSI Comms;

* the retirement of Larry Carter, CFO of Cisco; and

* job loss announcements from Cysive, Digex, Flextronics, Marconi, Nokia, RealNetworks, Sonus Networks and Tut Systems.

We saw excellent figures from Advant-e (back in the black) and DataWave (back in the black).

Good numbers were recorded by Ablest (back in the black), Anaren Microwave, Cisco, Cognicase (back in the black), Computer Access Technology (back in the black), DRS Technologies, Fast Search & Transfer ASA (back in the black), Fortel (back in the black), Golden Telecom (back in the black), Intercept, InterDigital, NovAtel (back in the black), Orbit International, Pixar, Scan-Optics (back in the black), Todito, Torex, Vision Solutions and Wireless Facilities (back in the black).

Satisfactory figures were posted by Anteon International (back in the black), ARC Wireless Solutions (back in the black), ComputerLinks AG, FairPoint Comms (back in the black), Intasys (back in the black), Meta Group (back in the black), NetNation Comms, Pomeroy Computer Resources, Rural Cellular (back in the black) and Ultimate Electronics.

Mediocre returns came from Circa, Crayfish (back in the black), DG Systems (back in the black), Elbit Systems, Frontstep (back in the black), Hector Comms, iGate, II-IV, Legend Group, Maxim Integrated Products (back in the black), Mercury Computer Systems, MTS (back in the black), NDS Group, Singapore Telecomms, Sourcecorp, SRA, TDS Informationstechnologie AG, TechTeam Global (back in the black), Track Data and Wireless Telecom Group.

Very poor results came from ACS-Tech80 (back in the black - just), GSE Systems, KPMG Consulting, OAO Technology (back in the black), Sapiens, Vicon Industries and Z-Tel Technologies.

Losses were posted by ActivCard, ACTV, Aegis Comms, Aether Systems, AirGate PCS, Airspan Networks, AIT Group, Aladdin Knowledge Systems, Alamosa, Allin, Artisoft, Auspex, Avidyn, Avnet, Brasil Telecom SA, Braun Consulting, Broadview Media, Cablevision Systems, CenterSpan Comms, Centiv, Centra Software, Charter Comms, Citadel Security Software, Citizens Comms, Concur Technologies, Conductus, Covad Comms Group, Creo, Critical Path, Crown Castle International, CSI, deltathree, DISC, DSL.net, ECI Telecom, eGain Comms, Emulex, En Pointe Technologies, Equinix, F-Secure, Focal Comms, Franklin Electronic Publishers, Frontline Comms, GCI, Genus, Identix, Infonet, Innodata, Intelidata, Intelligent Systems, InterTAN, interWAVE, Intrado, LCC International, LOGIC Devices, Loudeye, Magic Software, Millicom International Cellular SA, MindArrow, Mpower Holdings, MSX International, Navidec, Norsat International, Notify Technologies, Pac-West Telecom, ParkerVision, PCTEL, Previo, Pro Tech Comms, Qwest Comms, RCN, Safeguard Scientifics, Satmex, SEEC, ServiceWare Technologies, Sherwood International, Sina, Speedcom Wireless, StatPro, STM Wireless, Suntron, Tele2 AB, TeleCity, Telindus BV, Top Image Systems, Triton PCS, TSI Telecommunication Services, Tucows, Ultradata, Universal access, Versatel Telecom International NV, Verso Technologies, Viant, ViryaNet, Visual Data, Vitrix, Western Wireless, XATA, Zamba Solutions and Zap.com.

Other financial news included share buy-back announcements from Concord EFS, EarthLink, ESS Technology, Innodata, Input/Output and Sykes Enterprises; profit warnings from eGain Comms, Identix, Pumatech, Qwest Comms, RealNetworks, SBS Technologies, Sonus Networks, Torex and Univision Comms; and share split announcements from Imaging Technologies and Novatel Wireless (reverse).

Additionally, TDS has revised its previously reported figures to reflect a write-down from WorldCom; Previo has filed a dissolution proxy; and Interliant has filed for Chapter 11 protection.

Locally

AdvTech (+11.1%)
AST (-11.8%)
Casey (-27.3%)
CCG (-87.5%)
ERP.com (-37.5%)
Idion (+17.6%)
Intervid (-25%)
Jasco (+9.9%)
Labat (+23.4%)
SetPoint (-16.7%)

Internationally

AIT Group (-77%)
DDi (-40.7%)
eGain Comms (+41.2%)
Elcom International (+96%)
Entrust (+36.2%)
Focal Comms (+53%)
NCD (-35.7%)
Paxson Comms (+44.3%)
Sanchez Computer Associates (+36.7%)
TeleWest Comms (-38.1%)

Last week saw the staging of Gartner`s 2002 Symposium/ITxpo. Apart from the severe doubts expressed that the second national telecoms operator would find a suitable overseas partner, some of the key messages that emanated from the conference were:

* Corporate governance is paramount, specifically re the accuracy of the information generated and how that information is managed.

* Outsourcing is the dominant "technology" trend in the current environment, which is unlikely to improve significantly before late 2003 or early 2004.

* The SA ECT Bill has many more "positives" than "negatives" and places SA well ahead in this regard, when compared to Europe, for instance.

* We will see more of the industry consolidation that is currently underway.

* We need as a country to become less conservative in our ICT approach, and should initiate some well-planned risk scenarios re, for example, product adoption, that will if successful, place organisations ahead of their competition in a global context. SA management only too readily accepts traditional and "safe" product decisions.