The great divide

The exploits of Paul Allen, co-founder of Microsoft, and the aftermath of the Olivetti/Telcom Italia deal, dominated the international business world of IT last week.

I`ve said many times that there are too many locally listed IT companies.

Allen`s activities included broadening his interests in the online brokerage industry through the $300 million stake taken in Datek Online Holdings, which runs a Web brokerage, via his Vulcan Ventures operation and a group of other investors.

Additionally, his Charter Communications cable company acquired Falcon Cable TV and Fanch Communications in deals totalling $5.6 billion, to catapult the company into the number four slot of cable TV operators. Maybe some day they will use the distribution capability of the cable business to deliver Datek`s products into the home.

Locally, the flood of results from SA companies stole much of the headline space. These results start to separate the men from the boys, with many similar sets of numbers to come over the next few weeks. I`ve said many times that there are too many locally listed IT companies, and following the current results cycle, maybe some much-needed rationalisation and sanitation will occur.

• good maiden full-year numbers from InfoWave;
• satisfactory maiden full-year figures from Casey Investment Holdings (revenue slightly below forecast but income slightly better than forecast; second half performance worse than first six months);
• excellent maiden interim results from Vesta Technology;
• good maiden half-year numbers from EC-Hold;
• satisfactory maiden interim numbers from Skills Accel (revenue just below pre-listings forecasts, but income nearly 10% above);
• half-year loss from Log-Tek Holdings (revenue also down by about 20%); and
• a nine month loss by Wentech (but revenue looks OK).

[Local]

Local Cautionary Notices (see attachment)

Local Listing calendar (see attachment)

Other local news included:

• the listings of Acuity Holdings and Streamworks, the latter having recently been approached by both Datatec and Dimension Data (denied by Dimension Data) regarding a possible acquisition;
• the approval by the shareholders to the name change of Impotek Group Holdings to I-fusion Holdings, and of Log-Tek Holdings to Conlog on completion of the group`s restructuring;
• Dectronic`s disposal of its 49% shareholding in Thembelitsh Solutions;
• continuing unrest within the Brainware group, this time with the splitting-off of the e-commerce arm; and
• the formation, by Spescom, of the first black women`s IT partnership, known as Spescom Temoso.

• the announcement of Craig Conway, ex-president of One-Touch Systems, as the new president and CEO of PeopleSoft, as predicted last week. He succeeds founder David Duffield, and it is hoped that he is able to pull the company out of its current troubles, but is unlikely as part of this process is to shed some 400 jobs;
• the name change of Software AG to SAGA Systems;
• the appointment of Mark Leininger as CEO of Software Publishing, which has been without a CEO since 1997;
• the appointment of Mary Coleman, the ex-CEO of Arum Software, acquired by Baan in 1997, and entrepreneur of the year in 1996, as the new CEO at Baan; and
• the appointment of John Zrno as the new president and CEO of IXC Communications.

[International]

We saw excellent figures from Intuit (back in the black with a bang!) and Legend Holdings.

Losses, however, came from Autodesk, Champion Comms Services, Descartes Systems Group, Fujitsu (full-year), Hitachi (full-year), ICL (full-year), Information Advantage, Intershop Comms, JD Edwards, LanVision Systems, Mitsubishi Electric (full-year), NorthPoint Comms, Oki Electric Industry, Peritus Software Services, QAD, Star Technologies, Toshiba (full-year), Video Display and Vitech America.

Good numbers were recorded by Dycom Industries, Northstar Computer Forms, Novell and NT&T (full-year). Satisfactory results were reported by Cable Design Technologies, Computer Associates, Fine.com (back in the black - just) and SemTech.

Mediocre returns came from Dialog, EDP, LTX (but back in the black), while very poor results came from Ansoft (only just in the black) and NTS Computer Systems.

Other financial news included profit/results warnings from JD Edwards, Olicom and Oracle; and share splits from MindSpring and Tandy. NCTI reported a Q1 results adjustment, while Informix settles suits over earnings re-statements.

Locally

Bryant (-22.5%)
Cyberhost (+28%)
Dectronic (+19%)
Infiniti (-26.7%)

Log-Tek (-29.5%)
Wentech (+100%)

Internationally

American Nortel Comms (-20%)
Infinium (+21.6%)
Information Advantage (-21.6%)
Mapics (+33.3%)
Marcam (+62.2% - acquisition-based move)

Last week saw the bulk of the key Japanese IT conglomerates announce their results from the previous trading year, which finished on 31 March 1999. The majority of these companies reported losses, some for the first time for many, many years, eg Toshiba.

Software has always been the Achilles heel of the Japanese, and the trend away from hardware to software and services is now hurting them badly. Only some 10 years ago it looked like Japan would dominate the IT world since it had the majority of companies in the top 20 worldwide IT list.