WorldCom woes worsen

A Chapter 11 filing by WorldCom, Symantec`s buying spree and some very bad quarterly results that included the first-ever loss by SAP and very poor numbers from AMD, EMC, Ericsson, IBM, Nortel Networks and Sun Microsystems, dominated the international world of IT and telecommunications last week.

According to its books, WorldCom`s assets are $103.8 billion, against a mere $63.4 billion for Enron.

Paul Booth, MD, Global Research Partners

At home, the proposed management buyout of MB Technologies and the final closure of Spicer stole much of the local IT/telecoms headline space.

* we saw a full-year loss from NetActive (revenue also down) and an interim loss from CCI Holdings (formerly Y2Ktec).

[Local]

Other local news included:

* a share re-purchase announcement from UCS;

* the announcement that Netactive has ended its Internet service provider focus with its sell-out to Tiscali of this part of its business portfolio;

* the resignation of Sonny Fisher, CEO of Y3K, and the appointment of Ryan Price as the new CEO of Y3K; and

* the winding-up of Spicer.

Additionally, the proposed management buyout of MB Technologies is at a rate of R1.40 per share, a figure which is well below the original listing price of R2 a share but above the R1 per share that was paid for the 30 million additional shares offered in December last year, and above the 85c NAV per share calculated for the interim results published earlier this year. Since the group consists of two very different entities, maybe it is intended to break-up the group and persue separate strategies, which was impossible to do as a listed unit.

* we saw the appointment of four new directors at Computer Associates, but with one of the outgoing directors on the list of directors that Ranger Governance, led by Sam Wyly, has been seeking to remove;

* the renaming and re-financing by its bankers of Energis as Chelys; and

* the name change of Deloitte Consulting to Braxton Associates.

Additionally, look out for the buyer for SBC Comms` e-commerce software unit; a possible board re-shuffle at Gemplus; and a possible Chapter 11 filing from WorldCom.

[International]

Other international news included:

* the appointments of Richard Bravman as CEO of Symbol Technologies, Francis DiPrete as chairman of Computone, David Dorman as chairman and CEO-designate of AT&T, William Nuti as president and COO of Symbol Technologies, Ron Sommer as CEO of Deutsche Telekom, Jerome Swartz as chairman of Symbol Technologies, John Van Siclen as CEO of Interwoven, and Phil Weaver as CEO of Nuvo;

* the resignations of John Freitag, chairman of Computone and Robert Pittman, COO of AOL Time Warner; and

* job loss announcements from Avnet, Citrix Systems, Ericsson, HP, i2 Technologies, Inktomi, Intel, Lante, Orchestream, Qwest Comms, Siebel Systems and Transmeta.

We saw excellent figures from Echelon, Lexar Media (back in the black), UTStarcom, WebEx (back in the black) and Zoran.

Good numbers were recorded by AVX, Benchmark Electronics (back in the black), Cerner, Cognizant Technology, CorVel, eBay, FileNET (back in the black), Global Payments, Impreso, Internet security Systems (back in the black), Itron, Ixia, L-3 Comms, Microna Semiconductor Holding AG (back in the black), Monolithic System Technology, Nextel Comms (back in the black), NVE (back in the black), Persistence Software (back in the black), Plumtree Software (back in the black), Retek (back in the black), RF Micro Devices (back in the black), Rimage, Riptech, Samsung Electronics, SanDisk (back in the black), Stratos Global (back in the black), SunGard, Symantec (back in the black), Tele2 AB and Wanadoo SA.

Satisfactory results were posted by ADP, Alliance Data Systems, Avocent (back in the black), Boston Comms Group, CanWest Global Comms, Cass Information Systems, CDW Computer Centers, Celestica, Extreme Networks (back in the black), Infinium (back in the black), Informatica (back in the black), Intel, Inter-Tel, McData (back in the black), Mercury Interactive, Microchip Technology, Microsoft, Nokia, Packeteer (back in the black), Pervasive Software, Phoenix Technologies (back in the black), Pixelworks (back in the black), Plantronics, QLogic, Renaissance Learning, SS&C Technologies, TSYS, Unisys, Vodavi Technology, Xilinx and Zebra Technologies.

Mediocre returns came from Adtran, Applied Innovation, Apple, Barra, Black Box Comms, Catapult Comms, Ceridian (but back in the black), Citrix Systems, Compuware, Diagonal, Drexler Technology, EFI, Equifax, Exar, Gartner (but back in the black), Giga Information Group (but back in the black), INSCI (but back in the black), Iomega (but back in the black), Misys, National Instruments, NetSolve, PC Connection, Pitney Bowes, Planar, Polycom, SchlumbergerSema, Siebel Systems, SpectraLink, Sybase (back in the black), Tetra Tech, Tollgrade Comms, TSR, Veritas (but back in the black), Visual Networks (but back in the black) and Wabtec.

Very poor results were reported by AMS, Andrew, Avid (but back in the black), CTG (but back in the black), DSP Group, EMC (but back in the black), IBM, Inficon Holding AG, InFocus, Photon Dynamics (but back in the black), Plexus, Sun Microsystems and Zomax.

Losses came from 3D Systems, Actuate, Advanced Materials, Advent Software, Akamai Technologies, AltiGen Comms, AMD, Applix, ASML Holding NV, Aspect Comms, Asyst Technologies, Atmel, ATMI, August Technology, Axcelis, Bell Microproducts, Broadcom, Brooktrout, Celeritek, Centennial Comms, Chartered Semiconductor Manufacturing, Commerce One, CyberSource, Cylink, Cypress Semiconductor, Daleen Technologies, Data I/O, Datalink, Digi International, Digital Think, Documentum, E.Piphany, Electro Scientific, Epcos AG, Epic Data, Exabyte, Ericsson, eXceleron, Extensity, Gateway, Handspring, Helix Technology, Hifn, HNC, Hughes Electronics, i2 Technologies, IDT, iManage, Infineon, Inktomi, Innovex, inSilicon, Interphase, Interwoven, Intrusion, Iona Technologies, Kana Software, Keithley Instruments, Keynote Systems, Latitude Comms, Level 3 Comms, LogicVision, Macromedia, MapInfo, Mentor Graphics, Metris, Microgen, MIPS Technologies, Motorola, MRO Software, net.com, NetScout Systems, Network Equipment Technologies, Nortel Networks, Omtool, Optika, Orckit Comms, Oryx Technology, Paradyne Networks, Parthus Technologies, Philips Electronics NV, PLX Technology, PMC-Sierra, Proxim, PTC, RadiSys, Rainmaker, Rational Software, RealNetworks, Richardson Electronics, Rogers Comms, Rogers Wireless, ROHN Industries, SafeNet, Sanmina-SCI, SAP, Satyam Infoway, SCT, Scientific-Atlanta, Seagate Technology, Secure Computing, Semitool, Sento, Shenandoah Telecomms, Sipex, Spectrian, Sprint, StorageNetworks, Sunrise Telecom, SupportSoft, SVI Solutions, Symbol Technologies, TechTarget, Telelogic, Telephone and Data Systems, Tellabs, Teradyne, Three-Five Systems, Timberline Software, TMSSequoia, Transmeta, Tumbleweed, Turnstone Systems, US Cellular, USDATA, Virage, Vitesse Semiconductor, Xicor and Ziff Davis Media.

Other financial news included share buy-back announcements from iManage and Intuit; and profit warnings from Actuate, AMD, Chartered Semiconductor Manufacturing, eGain, i2 Technologies, Iona Technologies, Orchestream, Philips Electronics NV, Photronics, Plexus, SAP, Siebel Systems, Silicon Storage Technology, Syntellect, VerticalNet and Wabtec.

There were also share split announcements from Commerce One (reverse) and Copper Mountain Networks. Additionally, Ericsson has announced the discounted price for its rights issue; Orchestream is to restate its revenues and Scient has filed for Chapter 11.

Locally

AdvTech (+15.6%)
Casey (+100%)
Crux (+50%)
Dectronic (+26.7%)
FrontRange (+16.8%)
Hicor (+25%)
Netactive (+36.7%)
Stella Vista (-37.5%)
Vesta (+50%)
Y3K (+100%)

Internationally

Bell Canada International (+88.4%)
DA Consulting Group (+50%)
General Communication (-29.7%)
Nextel Comms (+50.9%)
Peregrine Systems (-42.3%)
SBA Comms (+43.2%)
Rural Cellular (+53.4%)
Syntellect (+44.9%)
VerticalNet (+346.7%)
WorldCom (-33.8%)

WorldCom`s filing for Chapter 11 will be the largest US bankruptcy and some 50% bigger than that of Enron. According to its books, WorldCom`s assets are $103.8 billion, against a mere $63.4 billion for Enron.

We know that there will be a local impact, although at present, it is difficult to predict what this will be. Undoubtedly, there will be a direct effect on UUNet, and it is likely to delay the Telkom initial public offering, since the telecommunications climate couldn`t be more unfriendly for such a step.