Mustek/Rectron merger rumours abound

The split in the Commerce One/SAP relationship and the start of the flood of quarterly results and year-end numbers, including those from Apple, Compaq, IBM, Intel, Microsoft, Nortel Networks and Sun Microsystems, dominated the international world of IT and telecommunications last week.

2001 seems to have been a dismal year for mergers and acquisitions.

Paul Booth, MD, Global Research PARTNERS

At home, the rumours about a Mustek/Rectron merger following a joint cautionary announcement and the results from Dimension Data`s Datacraft Asia operations stole much of the local headline space.

• we saw a half-year loss from Datacraft Asia, part of Dimension Data (revenue also down, although in line with expectations).
• CCI Holdings, the revamped Y2Ktec, started trading on the JSE
• Ixchange officially started trading as FrontRange Limited.

[Local]

Other local news included:

• the launch of a SA subsidiary of Maskew Longman Miller called Pearson Education South Africa, for the supply of computer books in Southern Africa;
• the name change of Gestetner to NRG Group;
• Controlware Comms Systems AG established its SA operation;
• the withdrawal from SA by Sitara Networks coupled with the appointment of Duxbury Networking as its representative (Sitara had only been in SA directly for a short time);
• the appointments of BG van Rooyen as the interim chairman of Labat Africa and Titi Kekana as CEO of Crux Information Technologies; and
• the announcement by Micrologix that it has entered into an agreement to acquire the clearing and forwarding company Spectrum Shipping, and will change its name to that on completion of the deal, thus ceasing to be an IT stock.

• we saw the failure of HP to set a date for shareholders to vote on its very controversial acquisition of Compaq;
• the scaling back significantly of the SAP/Commerce One alliance, which could turn the two companies into competitors; and
• the move of Network Associates to the NYSE from Nasdaq.

Additionally, look out for a statement as to how long IBM`s CEO, Louis Gerstner, will remain at the helm, as he approaches his 60^th birthday in March.

International acquisitions, mergers, joint ventures etc (see attachment).

[International]

Other international news included:

• the appointments of Hans-Arne L`orange as CEO of Birdstep Technology, Paul Otellini as president and COO of Intel, and Angelo Ugge as CEO of MEMS Optical;
• the resignation of Walt Keller, founder and CEO of GraphOn; and
• job loss announcements from 3Com, CMGI, Conexant, Digital Lightwave, InterVoice-Brite, LSI Logic, Marconi, Mitsubishi Electric and Next Level Comms.

We saw excellent figures from CGI, Echelon and Genesis Microchip.

Good numbers were recorded by Creative Computer Applications (back in the black), Infolink Technologies (back in the black), ITG, McAfee.com (back in the black), Navarre, Simplex Solutions, Symantec and Wegener (back in the black); and satisfactory ones by 3M, ADP, Angoss Software (back in the black), Black Box, Check Point Software Technologies, eBay, IBM, II-VI, Overland Data, PanAmSat and Pervasive Software (back in the black).

Mediocre returns came from Adtran, Andrew, Apple (back in the black), Applied Films, BCT International, Compaq (back in the black), Elantec Semiconductor, Exar, Intel, Iomega, Juniper Networks, Linear Technology, Mercury Computer Systems, Microsoft, Molex, Plantronics, RF Micro Devices, Samsung Electronics, Scientific-Atlanta, SCT and Virage Logic (but back in the black) and Xilinx.

Very poor results were posted by Amtech Systems, C-COR.net and infoUSA (but back in the black).

Losses were reported by AMD, ASML, Avaya, Brio Software, CaminoSoft, Celeritek, Com21, Comshare, Conexant Systems, Digi International, DigitalThink, DMC Stratex Networks, DoubleClick, Eagle Broadband, Easy Software AG, EXFO Electro-Optical, Extreme Networks, Handspring, Hughes Electronics, Inktomi, Innovex, inSilicon, Keynote Systems, Kulicke & Soffa Industries, Macromedia, MIPS Technologies, MRO Software, Multi-Link Telecomms, Myrient, net.com, NetScout Systems, Network Associates, Nortel Networks, Numerical Technologies, NVE, Oryx Technology, Parametric Technology, Plexus, Powerwave Technologies, Redback Networks, Rogue Wave Software, Sage, SBS Technologies, SmartForce, SofTech, Spectra Securities Software, Sun Microsystems, Tadpole Technology, Teradyne, Transmeta, TranSwitch, Unisys, Verilink, Vertex Interactive, Virage, Visual Data, Visual Networks, Vyyo, Workgroup Technology and Yahoo.

Other financial news included a share buy-back announcement from Convergys; profit warnings from Balda, Corning, Intelligroup, LSI Logic, Marconi, Next Level Comms, Read-Rite, Silicon Storage Technology, SpectraLink, Sprint, Virage and Xansa; and share split announcements from Imaginon (reverse) and Multimedia Games. Additionally, Globix has applied for Chapter 11 protection

Locally

Acuity (-37.5%)
Aqua Online (-37.1%)
CCI Holdings (+66.7%)
Elexir (+100%)
FrontRange (-19.9%)
Hicor (+25%)
Sethold (+21.1%)
Stella Vista (-30.8%)
UAM (+25%)
Vesta (+40%)

Internationally

AXS-One (+27.7%)
ConMat Technologies (+42.9%)
DA Consulting Group (+168%)
Enherent (+27.8%)
Orckit Comms (+37.5%)
Proxim (-39%)
Read-Rite (-42.9%)
Robocom Systems International (+60%)
Rural Cellular (-34.3%)
Ross Systems (+34.5%)

2001 seems to have been a dismal year for mergers and acquisitions. The data from Webmergers.com suggests that only $39.7 billion was spent to buy 1 289 Internet companies. To put this in perspective, the valuation is only about 25% of the amount spent last year by America Online to acquire Time Warner.

Last year`s Internet deal volume is less than the $40 billion to $60 billion accounting charge that AOL will write down for the deal. Maybe 2002 will be substantially better.

I will be in the US attending the Lyra Imaging Symposium as this issue of Booth`s Bites is published, so my next column will appear on 4 February, and will contain information covering the two previous weeks.