After a swift start to its FY (see Harvey Nash quick off the blocks in new year), growth at UK-based international recruitment, outsourcing and offshoring firm, Harvey Nash, pulled back in Q2 compared to the prior quarter.
First half headline revenue growth (to 31st July) looks like coming in at a still creditable 8% (12% at constant currency, ccy) vs 12% (15% ccy) in Q1. Gross profit growth held steady at the Q1 level of 6% ccy but H1 operating profit growth at 5% (12% ccy) was substantially slower than the 12% (17% ccy) recorded in Q1.
Harvey Nash CEO Albert Ellis alluded to ‘robust’ UK growth, though permanent recruitment demand in Germany was ‘subdued’. There was no news on Harvey Nash’s Vietnam-based offshore services activities though undoubtedly we will hear more in the full H1 screed at the end of September.
Posted by Anthony Miller at '07:30'
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Yesterday, NASDAQ closed at a level not seen since those heady pre Dot Com crash days of 2000. A 14 year high.
Tonght Apple closed at an all-time record high. You might remember it hit its previous high in Sept 2012 before crashing nearly 50% in 2013. Apple is now nearly double its 2013 low and 25% up YTD.
There are lots of reasons for this. Apple has done much better with the iPhone in China. But also there is great anticipation for the iPhone6 launch in Sept. Soon after that we might see the iWatch finally unveiled. A report last week forecast that the iWatch would surpass iPad sales by 2018. Actually I think that wearables – of which the iWatch is a part – will be the fastest selling technology of all time. It took the iPad/tablets 2.5 years to be used by 25% of the US population (I think a similar figure would be found in the UK too). After 4 years they had a 50% usage. I suggest the iWatch/wearables could reach a 25% usage in just a year or so.
The opportunities are enormous. Indeed, he who owns the ecosystem will be King. Apple is pretty good at owning ecosystems. I guess that’s what is behind the recent Apple rally.
Posted by Richard Holway at '21:55'
The debacle over Raytheon’s eBorders contract with the Home Office has been drawn to a conclusion. Those following the developments may remember that the Home Office terminated Raytheon Systems’ (RSL) eBorders contract for default in 2010, just after the new coalition Government came to power; it blamed a failure to meet key milestones (see Home Office sacks Raytheon from eBorders). A Tribunal has now ruled that the termination was unlawful (this follows recent unconfirmed press reports that Fujitsu has also been successful in its Tribunal relating to the NHS National Programme for IT – see Fujitsu: between a rock and a hard place).
As a result, the Tribunal has awarded RSL damages and other monetary relief of c£185m. According to RSL’s statement, it also found that the Home Office had wrongfully retained £50m it had drawn on RSL letters of credit in April 2011. The Tribunal denied all Home Office claims for damages and claw-back of previous payments.
Raytheon was acting as prime contractor and systems integrator on the eBorders program. Raytheon’s statement concludes “the Tribunals ruling confirms that RSL delivered substantial capabilities to the UK Home Office under the eBorders program”. Interestingly since the contract termination, the Home Office has struggled to get the eBorders program back on track – see ‘eBorders system still not meeting original aims’.
Having been exonerated from being in breach of contract, we could see Raytheon tackle the UK civil government sector once again. Following the award of the eBorders programme, Raytheon had seen an opportunity to use the contract as a platform to pursue other opportunities in areas outside of the defence market, particularly drawing on its cyber security capabilities. With the Tribunal hanging over it, it appears that any such ambitions took a back seat. Now Raytheon states, it is “committed to partnering with UK Government on key defence, national security and commercial pursuits”. We have already heard Raytheon mentioned in relation to an existing opportunity; it looks like the defence contractor could be on our radar once again.
Posted by Georgina O'Toole at '10:09'
Fear and fines plus ever changing business perimeters are forcing security up the investment agenda and reinforcing the need for multiple levels and types of security solutions. This environment is providing an opening for all types of security specialists, including Boldon James (a subsidiary of defence and security provider QinetiQ), who is focussed on user-executed data classification.
According to CEO Martin Sugden, the classification system allows users to take responsibility for securing their own data - classifying each piece of information through the use of a simple label that identifies its value (e.g. sensitivity, level of criticality). Other security solutions, such as data loss prevention, can use the label as part of their operations. What is interesting is that the Boldon James approach puts security literally and metaphorically at the fingertips of business users, rather than making it purely an IT department matter. With user awareness a critical part of overall enterprise security this is a notable direction and the user driven model sets it apart from other classification offerings. The approach also means individuals can take into account the context of the data (especially in unstructured data) and label it accordingly, capturing content that an automated classification engine might let through (embarrassing comments on a business partner/customer contained within an email for example). The ability to deal with context (including automatically) is becoming a critical factor across the entire data management and security sector.
The Boldon James offering will only form a small part of a multi-layer security solution for organisations, hence it has many technology partnerships. While the approach is very valid, one of the most valuable aspects is the increase in user securoty awareness it can bring about.
Posted by Angela Eager at '09:50'
The Cabinet Office has confirmed that its Digital Marketplace will be replacing CloudStore over a four week transition period commencing at the end of August (see here). The subsequent twelve months will witness further centralisation of procurement with the Digital Marketplace as the destination for the procurement of the combined G-Cloud and the Digital Services Framework (DSF).
The announcement confirms our thinking that the Cabinet Office will continue its push for a centralised approach to procurement. We highlighted in February (see Government Digital Marketplace to be established) our concerns whether the aggregation of the frameworks will improve the user experience for buyers – and hence revenues for suppliers – unless the Digital Marketplace presents clear navigation routes and clearly articulates the objectives of each framework.
The Cabinet Office is optimistic that the Digital Marketplace will give a better ‘user experience’ having consulted potential users such as heads of procurement, contracts managers and project managers. However we are yet to see equivalent input from the supplier community. Indeed, suppliers are keen to understand how the Digital Marketplace can help them understand buyer behaviour.
Eligible subscribers will have read our view (see UK Government G-Cloud: meeting its objectives?) that G-Cloud has not achieved its full potential as a springboard for the public sector to switch to cloud services. We are concerned that merely amalgamating the frameworks inside the Digital Marketplace will do little to alter the status quo.
Posted by Michael Larner at '09:49'
Prepare for a major shift in investment across the UK’s Life and Pensions industry. Although the latest interim results showed rises in operating profits, there are worrying signs over the long term. The sale of annuities, a £12bn market and a long term source of profit, has taken a big hit as pensioners look to other ways to generate income. Annuity sales were down 43% in the case of Prudential, with the value of overall new business written in the UK falling, by over 20% in the case of Aviva and Friends Life.
This shift has been unleashed by the change in rules governing annuities introduced in Chancellor Osborne’s March Budget. Repercussions will extend across the asset management industry. A new influx of customers, with relatively small amounts to invest, will demand personalised advice and good user experience over multiple channels. The regulator for his part will require extremely high standards of transparency and compliance to protect these investors. New competitors will also be very aggressive as they look to pick up business.
For the established players, this will require significant changes to business practices and in the use of technology, particularly in the way they provide advice. For example, Prudential has announced a £100m investment in digital systems, centred on an online investment platform to improve their market presence and reduce the costs of servicing customers.
In our recent report “Hot Topics and Opportunities in the Insurance sector”, available to FinancialServicesViews subscribers here, we highlighted the difficulty that companies will face in generating profit from dealing with this influx of new customers. The changes will also accelerate the wave of mergers and acquisitions in the asset management sector, further adding to the opportunities for IT services suppliers as this industry faces fundamental change.
Posted by Peter Roe at '09:37'
While most of the attention on the Indian offshore services scene is focused on the usual suspect top- and mid-tier players, this barely scratches the surface of a vibrant and dynamic marketplace. Witness the change of ownership of New York headquartered (but otherwise India-centric) Oracle consultancy, Professional Access from Mumbai-based 3i Infotech to Pune-based Zensar Technologies. I only mention this because all three companies operate under the radar here in the UK.
Zensar is a little bit interesting because it used to be part-owned by Fujitsu until the Japanese company sold its stake to Indian industrial conglomerate RPG Group in 2007. Zensar, which has its own stock market listing in India, had revenues of a little under $400m last FY (to 31st March 2014) and ran a 14% operating margin. Professional Access had revenues in excess of $38m and has 800 employees. Just thought you might like to know.
Posted by Anthony Miller at '08:46'
We have been seeing a revolution in how people work. The proliferation of multiple devices, applications delivered by the Cloud, the expectation of processes being accessible at any time and from anywhere have all been driven by the user and will continue to be so. Collaboration and connectivity are at the heart of the workplace.
For the Enterprise, it is not just about productivity improvements. There is a bigger picture to consider which starts with the Business case ROI and real business outcomes focused on driving down costs, improving customer service and increasing revenue through employee effectiveness.
A balance has to be achieved between individuals’ convenience and corporate control. To do this, we must understand the needs of different types of worker to target the right people with the right technology and the right policy
In this latest White Book from Fujitsu, the focus is on starting with the required business outcomes, not the device, in order to effect business and IT change through mobilising the Enterprise. It discusses how to manage this change and how to build the business case within a context of the future of mobile solutions.
Posted by Fujitsu at '00:00'
Earthport, the cross-border payments service provider has announced that it is to take a 45% stake in ASPone, a financial technology company, whereby it will purchase the stake in four years’ time.
ASPone is based in Istanbul, Moscow, Hong Kong, Singapore and London, with businesses in network solutions for the financial sector and in the development of trading and execution systems. For the year to March 2013, ASPone had a turnover of £5.2m, a pre-tax loss of £0.8m and net debt of £2.6m. The maximum cost of the 45% stake would be £2.7m. Earthport and ASPone have been working together for several years.
Earthport has been growing rapidly and its reliance on technology and the requirement for implementation and development resources has mirrored this trend. The expanding international network, the integration with other ecosystems (such as with Eurogiro in July, see here), with other interfaces (such as with Fiserv, following the deal with State Street in May) and the foreign currency business will all be demanding additional technical expertise. This deal will help secure access to the software and financial solutions development resources of ASPone, de-risking a crucial element of Earthport’s growth plans.
Hank Uberoi, the Earthport CEO looks to have drawn on his experience at Goldman Sachs to build a complex deal structure, with various call options and other measures to link the eventual consideration to the value of the business and to protect Earthport.
This looks like a sensible move and should not distract the management, or investors, from the bigger story around Earthport as it builds on its strong position in the growing market of cross-border payments.
Posted by Peter Roe at '09:37'
Arcontech, the provider of real-time software for management of financial markets data, has made good progress over the last year in improving its bottom line, returning a small pre-tax loss, of £35k, in the year to end June. This compares with a loss of around £350k in the previous year. Revenue for the year was up 8%, to £1.98m.
The growth rate has declined consistently, and dramatically, over the year. Last year’s revenue was up by 25% with first half figures, see here, showing an increase of 15%. Full year results now indicate that second half revenues advanced by only 2% (both when looking at year-on-year comparisons and H2 over H1). The company has complained about the slower sales cycle for some time now, but also points out that customers have been attending to other regulatory issues, i.e. not the ones covered by Arcontech’s portfolio. On the positive side, costs have been reduced and the management has exerted better control over development spending to improve return on investment.
The company continues to hold a cash balance, now standing at £730k, so there is some room for additional product development. The brief statement accompanying the results says that the management are talking with clients to identify additional growth areas. This does not inspire confidence that a road map currently exists to take this company forward in what should be an attractive and growing market area. If the company is to make further progress, as anticipated by the CEO, a clearer sense of direction would be welcome.
Posted by Peter Roe at '08:54'
There are just a handful of tickets left available for TechMarketView’s 2014 Presentation and Dinner at BAFTA on the evening of Wednesday September 17th.
Race for Change: An Evening with TechMarketView, sponsored by Telecity, is shaping up to be the high profile date in the UK tech calendar – the guest list already reads like a ‘Who’s Who’ for the sector.
The event includes short, insightful presentations from the entire cast of TechMarketView research directors, 'topped' by our esteemed chairman, Richard Holway, and 'tailed' by our inimitable Managing Partner, Anthomy Miller. And yes, Miller will feature his not-to-be-missed Top 20 Countdown of the leading suppliers of software and services to the UK market! No one gets spared a glare from his cynical eye!
For details of the evening see our Events pages then book one of the last few places by clicking here or by contacting Tina Compton at techUK who is organising the event for us (email tina.compton@techUK.org). Don’t miss the opportunity to join us for what promises to be an informative and enjoyable evening. #TMVEvening2014
Posted by HotViews Editor at '08:51'
An otherwise encouraging trading update from insurance business process software and services provider The Innovation Group (TIG) was nuanced with a guarded statement on recent euro weakness, advising that “any further currency changes will feed through to full year results”. A ‘significant’ proportion of TIG’s revenues and profit is denominated in the common currency. This aside, management expects an ‘in line’ finish to the full year (30th Sept).
The company also advised that negotiations for a third acquisition are on track for conclusion by the end of the FY (see TIG splashes c£50m on M&A brace). The deal should boost FY15 earnings.
This is a watershed year for TIG as CEO Andy Roberts aggressively steps up the growth pace. Managing (potentially) three acquisitions in short order will require eyes to be kept firmly on balls, so it is as well that Roberts had recently brought in Paul Nichols as software ‘team captain’ (see TIG CE reunites with former Kewill compadre) to bolster management ranks. To stretch the soccer analogy perhaps a tad too far, Roberts will need to ensure that the various balls in play in product development, service delivery and acquisition integration (not forgetting Treasury management) do not result in any ‘own goals’.
Posted by Anthony Miller at '08:03'
The UK banking sector is at an important time in its history. After years of cost-cutting and little progressive action, senior management teams at the established banks now realise that they have to accelerate the rate of change if they are to continue to grow and return to delivering shareholder value. Major decisions need to be made about priorities and the scope of activities, particularly with regards to the IT technology which supports their operations.
This report is based on the discussions at a techUK roundtable of executives from across the Banking sector, including representatives of SITS suppliers, customers, lawyers and trade associations. The keynote speech, debate and the extensive insight from TechMarketView in this report highlight the important issues that all suppliers to the Banking sector need to consider as they attempt to win business. As the established banks wrestle with the issues of legacy systems and organisations, increasing competition and demands of their customers this will generate substantial opportunities for the supplier community.
"The Modernisation of the UK Banking sector" builds on earlier research published in the FinancialServicesViews research stream about this crucial topic and provides additional insight for suppliers to established banks and new competitors alike. The report is available to FinancialServicesViews subscribers via this link. If you are not yet a subscriber to this research stream, please contact Deb Seth of our Client Services team.
Posted by Peter Roe at '13:30'
The much acquired and sold-on SalesLogix CRM business is being sold again – this time Infor is the buyer. Several vendors have tried and failed to make SalesLogix a product of desire in the SaaS CRM world, raising the question of whether Infor can do any better.
Long-lived SalesLogix has a chequered history. It was acquired by Sage in 2001 for £227m and sold in 2013 for £93m to digital marketing provider Swiftpage – who decided to swiftly pass it on. Terms were not revealed but it is to be hoped that Infor is getting it for a bargain price. The company certainly plans to invest heavily - concentrating on scalability, redesigning the user interface and adding industry-specific functionality. SalesLogix represents a significant move into SaaS CRM for Infor and CEO Charles Phillips also says the industry aspect will be a differentiator – indeed this is not an area where CRM has really been taken to date. Infor‘s plans to enable SalesLogix to make use of the industry specific data held within its back office systems also makes this an interesting data-driven play.
However, Infor will have to pour significant investment into some of the fundamental aspects of SalesLogix to get it where it thinks it should be It also has the challenge of integrating it with the expansive and multi-code based Infor portfolio, a task that should not be underestimated (Sage failed to mate SalesLogix with its portfolio) despite the moves Infor has made developing its own middleware layer. Infor is using this acquisition to enter the cloud CRM market but surely there were better candidates in the market with more modern SaaS architecture or better alignment with Infor. This acquisition is reminiscent of the pre-Phillips days when the company was in frenzied buying mode and ended up with a scatter of unconnected products and no coherent strategy.
Posted by Angela Eager at '09:45'
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Autodesk’s sliding performance has bottomed out and it is back on the rise, looking at its Q2 results. Management had talked of more momentum at the end of the last fiscal year (see Autodesk still struggling for growth) and the period to July 31 2014 proves the point. Revenue of $637m (including $11m from the Delcam acquisition) was up 13% yoy and beat market estimates. Earnings were significantly down – from $61.7m to £33.3m – but they also beat market expectations. Shares rose c4% in after-hours trading.
Overall the results were a mixed bag, with the move to subscription revenue impacting profits (but the company does have almost $1bn in deferred revenue) while suite sales helped drive revenue. The important Platform Solutions and Emerging Business sector only saw a 5% revenue increase. EMEA was the best performing region, with a 21% hike in revenue.
Autodesk has fingers in many (vertical sector) pies and while this breadth makes for a large addressable market there is the on-going question of whether it has the resources to go deep enough into each one. Aveva with its more limited focus tends to outperform Autodesk. CAD provider Autodesk is looking at the 3D printer movement for a swath of new business but this has not yet materialised. However, Autodesk has raised full year revenue and earnings guidance so is confident that the overall direction this year is upwards.
Posted by Angela Eager at '09:43'
The Markit management have succeeded in an early objective following its New York listing a couple of months ago, by not disappointing its new investor base. Second quarter figures were good with revenue rising by 11% to US$265m – ahead of consensus forecasts by a reasonable 3% margin. Organic growth provided 4.3%pts of the 11% increase.
For the six months to June, revenue was up by 12.5% to US$524m and EBITDA margins crept upwards to 45.8%. The smallest of the Group’s 3 business units, Solutions, grew fastest, up 37% yoy boosted by the acquisitions of Markit Corporate Actions and thinkFolio. This unit accounted for just over one quarter of first half revenue.
Markit has set its sights on organic growth of 5-7% long term, with acquisitions boosting this growth into double digits. Following the IPO it has the currency and the visibility to accelerate its M&A plans and continue to provide a broad coverage of the financial markets.
The overall tone of markets has improved recently, as evidenced by Fidessa’s recent results, see here, but it could be affected by the very real issues of geo-political risk and disappointments in European economies. Nevertheless, the growing need for data, trading services and risk management should ensure that the management team of Markit will have plenty of scope to avoid disappointing its investors for a considerable time.
Posted by Peter Roe at '09:32'
Another company engaged in e-commerce has joined the AIM market, this time in the shape of ATTRAQT, a provider of e-commerce search, merchandising and recommendation technology. It is raising £1.25 million to fund a bigger sales team in the US and with a placing price of 50p, will have a market capitalisation of about £10m.
Over 10 years old, ATTRAQT provides an integrated online merchandising platform on a software as a service basis to online retailers. Through this, customers can generate personalised merchandising recommendations and a good online user experience to generate additional revenue per customer. One of the co-founders is Dan Wagner, serial entrepreneur, whose latest POS and mobile eCommerce venture Powa Technologies created a stir a year ago with respect to its initial funding and implied valuation but has arguably yet to deliver on its revolutionary vision.
Already ATTRAQT has several big names in its 80-long customer list including Tesco Clothing, Laura Ashley, paperchase and BBC Retail. The availability of this service on a pay-as-you-go basis could also prove appealing to smaller retailers who are investigating the opportunities of using customer data to increase profits.
While this could be an interesting addition to the ranks of AIM, the market for such platforms and data analysis is already becoming crowded and competitive. The key element of value in data mining is in the data itself and the ability to capture it from as wide a transaction base as possible. Nonetheless, with the additional funding and the momentum created by its existing customers, together with the continued growth of interest in this market, the shares are likely to attract good support.
Posted by Peter Roe at '09:25'
Birmingham Science Park-based private social network startup, Wambiz, has received £600k in funding from an angel group led by businessman Allan Murdoch. Wambiz, founded in November last year by two former investment bankers, had received around £400k in two prior seed funding rounds.
While Wambiz aims to become a cross-industry platform, it has kicked off in the education sector with its WAMedu service which uses what the founders refer to as Virtual Engagement Networks “that education providers can use to handle their day-to-day student communication, over more traditional means, such as email and text messaging”. WAMedu is currently being piloted in a handful of further education colleges.
A quick search on the internet reveals myriad private social network startups, so I would imagine if Wambiz is to stand out from the crowd, the key will be ‘verticalisation'. The education sector is as good a place to start as any, though I wonder whether there might not be some tech-savvy students out there who have been thinking along much the same lines …
Posted by Anthony Miller at '07:38'
There was good and bad news in the ‘A’ Level results today for anyone interested in tech.
The majority of STEM subjects saw an increase in participants. The numbers taking Physics and Chemistry were up 3%. The biggest rise for any subject (albeit from a low base) was the 11% increase in those taking Computing. But less than 4000 took Computing compared to nearly 90,000 taking English. More took Drama A Level than Computing. Fewer students took ICT ‘A’ Level – but this has come in for so much stick that I’m surprised that c9,500 still bother.
But isn’t it depressing that c90% of those taking Computing were male. Indeed, with the sole exception of biology, more males took STEM ‘A’ Level subjects than females. Over 65% of those taking further mathematics, physics and economics exams were male.
I don’t think I need to add my comments to the above stats. Indeed I can already hear the comments from the many HotViews readers that I know well. It just MUST change
Posted by Richard Holway at '13:45'
Capita has acquired Cork-based SouthWestern Business Process Services from private equity group Ion Equity, for €35m (£28m) on a cash free, debt free basis. The SouthWestern acquisition follows the company’s entry in to the German market with the takeover of German customer management player tricontes. Eligible subscribers would have seen in our analysis of H1 14 results (Capita continues to outperform 'the rest' (update)) that ‘Capita is little by little expanding its international reach’.
SouthWestern’s delivers customer relationship management, financial shared services, data processing and inspectorate services to organisations in both the private and public sectors. Fitting Capita’s model of acquiring firms with sector specific expertise SouthWestern has clients in the agricultural sector including Department of Agriculture Food and Marine, , the Department for Environment, Food and Rural Affairs, Bord Bia plus Eircom, Bord Gáis and Failte Ireland.
Capita has already stated that it expects SouthWestern to generate operating profits in the region of €7m from revenues of €47m in 2016. Today SouthWestern is forecasting an operating profit of €3.4m on turnover of €33.6m in its financial year to 31 December 2014.
Capita has a wealth of experience in on boarding acquisitions and will look to cross fertilise expertise and capabilities from the wider group in order for SouthWestern to achieve its ambitious growth targets.
Posted by Michael Larner at '09:58'
Maiden results from cloud analytics platform provider Rosslyn Data Technologies, which listed on AIM in April (see here) and is the holding company for Rosslyn Anlaytics, are encouraging but most of the work to capitalise on the IPO and the potential in the analytics market is still to come for this early stage company.
The 12% revenue increase to £2.1m, was in line with expectations, aided by a partner strategy that has expanded the customer base by 50%, plus more revenue from existing clients. 50% more customers but only a 12% increase in revenue is an odd combination and suggests a large number of small sales. These will seed the ground for future growth however and feed Rosslyn’s ‘land and expand’ strategy. It is in “advanced talks” with other potential partners and if these deliver it has the potential to gain a toe hold in a larger volume of organisations from which to grow. Timing and funds are everything however. As is expected at this stage in its lifecycle, losses are mounting - £3m vs. £1.7m – and it has £9m in cash (having raised £10m gross in April). But it is winning new business, expanding sales capacity internally and externally, while also investing in the product so there is a lot to work with – and analytics demand is only going to grow.
Posted by Angela Eager at '09:52'
Amazon has now entered the market for mobile Point-of-Sale terminals (mPOS) with its Amazon Local Register, whereby tablets or mobile phones use a $10 card reader to effect the payment. The company is undercutting market rates to generate momentum. The strength of the brand and the scale of its operation will be sending shivers through many smaller, but often well-funded mPOS start-ups, such as Square, Stripe and mPOWA.
With this move, Amazon opens up new ways to capture data on consumer behaviour to further strengthen its proposition and generate yet more market share. Last month Amazon also soft-launched a Mobile Wallet which although being rather limited in function provides the foundation for a more concerted attack on this growing corner of the market.
We have seen a lot of activity and hype in mobile commerce over the past couple of years as retailers, banks and technology companies worked out their strategies. But does the move by Amazon signal the start of a new phase of the market? Apple could well enter, starting with the likely enablement of contactless payments in the iPhone6 family and PayPal and Google continue to invest. As the road map for these players becomes clearer, the rest of 2014 and next year could be a busy time in mobile commerce as retailers push the use of mobile technology and roll-out their plans to secure market position.
Banks and credit card companies will also be concerned as newcomers capture a larger share of lucrative payments revenue and disintermediate them from their customers. This will add to the pressure on all the suppliers to this sector, including Monitise (and its IBM alliance, see here) as this increasingly fascinating market takes another step forward.
Posted by Peter Roe at '09:42'
Today’s trading update from Micro Focus contains a reminder that it is sticking with its rhythm of low single digit growth plus returns to shareholders. Q1 revenue, for the April to July period, was flat yoy on a constant currency basis but underlying EBITDA was ahead. Sales restructuring in North America caused a drag on revenue and Asia Pacific/Japan showed a small decline but International licence sales were described as strong. There is no change to the full year outlook and as this was only Q1 that low single digit growth is very much in reach, particularly if, as is expected, the company continues to tuck-in targeted acquisitions as it did last year (see here). Meanwhile there is more cash for shareholders - £84m. Micro Focus has on-going prospects in legacy system migration – it is not a high growth market but it is a steady one.
Posted by Angela Eager at '09:06'
Buy and build hosting minnow, Daily Internet, has been at it again with the acquisition of Evohosting for a total cash consideration of £395k. Evohosting is based in Maidenhead and supplies domain name and shared hosting services to a customer base of some 5,000. Daily Internet intends to cross-sell services into this client base. It says it will keep the Evohosting branding and retain staff at the Bucks office. The acquisition is expected to be immediately earnings enhancing and is being supported by the issue of new ordinary shares, which will raise £435k (before expenses).
Daily Internet is undertaking a buy and build strategy (see Acquisition drives Daily Internet growth), and during FY14 acquired hosting company, Netplan (for a cash consideration of £2.5m, plus an earn-out of £750k), and domain name provider, NameHOG (for a cash consideration of £150k). More acquisitions will undoubtedly follow.
Posted by Kate Hanaghan at '08:56'
Cisco’s Q4 revenue has come in flat at $12.4bn, better that the 1-3% decline it guided on in Q3 (see Cisco eases expected Q3 declines). Non-GAAP EPS was up 5.8% to $0.55. Full year revenue was down 3% to $47.1bn. Q1 revenue in FY15 is expected to range from flat to +1%.
Cisco’s business in developing markets is still taking a battering. For example, Brazil declined 13% in Q4. On the other hand, EMEA grew 2% in the quarter, led by the UK, which increased 6%. One of the reasons for this is that the UK (along with Germany) is having some success selling solutions and outcomes rather than simply pitching products.
Cisco is a good example of a technology company in the throes of its own Race for Change*. The rapid pace of technology and market change is putting pressure on established players to transform in order to keep up with new entrants and the demands of buyers. Indeed, in order to free up further funds for investment in growth areas, Cisco is to cut 6000 jobs (starting in Q1 FY15) – equating to 8% of its global workforce.
CEO, John Chambers, puts his finger on it when he says that transforming in a rapidly moving market requires decisiveness, investment and innovation. Indeed, executing on these three points is something we think all SITS players will ultimately be measured against in the short and medium term.
*Race for Change is TechMarketView’s theme at our presentation and networking event on 17th September. Are you coming? Last few places for ‘An Evening with TechMarketView’ at BAFTA
Posted by Kate Hanaghan at '08:32'
As re-signalled in a somewhat contradictory funding update two weeks ago, self-styled ‘pure-play provider of cloud-based IT and unified communications services’, Outsourcery, has confirmed yet another dash for cash as part of an effort to create a further £4.5m of working capital. Management had previously confirmed that the company “has sufficient cash resources for its immediate needs” but was in discussions “regarding a combination of debt and equity funding options”. Hmm.
The £4.5m is being cobbled together thus: £1.5m through a share placing at 20p per share (13% discount to last night’s close), diluting investors’ equity by 18% (directors subscribed to about one-third of the placing); a rescheduling of debt to release £1.5m in free cash flow (no terms disclosed); a 12 month salary sacrifice by co-CEOs Piers Linney and Simon Newton worth £0.5m (who also get new options under the company’s LTIP); and a further £1m in a proposed ‘organisational restructure’.
Well that’s all OK then.
Posted by Anthony Miller at '07:45'
Rather than the lull in activity that you might expect over the summer, it’s been a busy period in the NHS IT market with a number of headline-grabbing developments including the NHS Shared Business Services’ tender for a new clinical information systems framework valued at up to £1.25bn over six years, and increasing levels of M&A activity. TechMarketView subscription service clients can read our thoughts on the latest developments and their implications for the UK healthcare IT market in UKHotViewsExtra today.
Posted by Tola Sargeant at '20:47'
For all of us who really care about our young and, in particular, youth unemployment, the news today is really to be applauded. Unemployment amongst 16-24 year olds fell by 102,000 qoq and 207,000 yoy to 767,000 in June 14. That’s the biggest drop and the lowest level since ‘records began’.
But let’s not become complacent. That’s still a 16.9% unemployment rate for that age group – well behind Germany (7.8%), Netherlands (10.5%) and Denmark (12.6%).
It’s certainly not all the fault of either the economy or employers. Isn’t it interesting that 94,000 trained to become hairdressers whilst just 18,000 jobs were available. But only 123,000 trained in construction & engineering where 200,000 places were available (Source – Local Govt Association)
That’s why, as you know I’ve been so passionate in getting our young interested in technology and creating education (at all age levels) and entry-level job opportunities in tech. It’s also why I’ve been so keen on the Movement to Work programme at the Prince’s Trust because it is run by the major employers and therefore fits young people to the available jobs.
Indeed I’d like to think that all the passion on apprenticeships and the work of the Prince’s Trust were at least in some small part responsible for the excellent statistics today. Still a long way to go – but going in the right direction
Posted by Richard Holway at '15:54'
Today is the first day of trading for the new shares in MXC Capital after their reverse takeover of Broca . See MXC in reverse takeover of Broca. We have a special interest in this as MXC are the sponsors of TechMarketView’s Little British Battler programme. And, indeed, I participated in their 1p per share placing.
So I was particularly pleased to see the new shares trading today at 1.77p. Long time since I made a near 80% gain in an IPO!
MXC Capital is an AIM listed investment and advisory company specialising in the TMT sector; in particular turnarounds and ‘buy-and-builds’ taking minority stakes but with ‘strong board representation and oversight’. We look forward to reporting on their ‘corporate news’ in the future.
Posted by Richard Holway at '08:46'
Today’s AGM statement from Eckoh, the provider of secure payments products and customer service solutions confirms the optimism that surrounded their full year results, reported here. Management reports a significant increase in both revenue and margins during the first quarter of the year.
In the year since they acquired Veritape, they have shifted the balance of the business to secure payments and also accelerated the underlying growth rate. Today’s statement also announces two multi-year contracts to provide payments services to add to the five contracts won in second half of last year. They have also won a contract to supply a broad range of services into Tenpin Limited’s c.30 bowling and entertainment sites around the UK.
The US also offers good growth potential for Eckoh, following the signing of a distribution deal with a US BPO provider, see here, and an investment in a direct sales operation there. It looks like being another year of progress for Eckoh.
Posted by Peter Roe at '08:42'
Liverpool will be providing us with a glimpse of the future now that Proxama has set up a “mobile digital proximity solution” there. What this means is that the city centre is populated with low power Bluetooth beacons relaying messages to visitors to the City who have downloaded an app onto their mobile phone. “Geo-fencing” enables the system to send information relevant to the part of the coverage area where the visitor is, notifying him or her about events, offers, tourist information, etc.
The use of this technology has been piloted in various shopping malls and we would expect to see some “go-live” announcements over the next few months. The Liverpool venture is the first project of its type in the UK to be funded by multiple organisations, giving coverage across a city centre. It should provide a useful test bed for other such ideas. Perhaps it won’t be long before these systems are commonplace across our major cities.
In terms of revenue generation for companies like Proxama, it is hard to believe that these installations will be big money-spinners. However, it will get more and more people used to the idea of relevant and contextual information over the phone, creating opportunities for companies to monetise this capability by the distribution of tailored offers and the handling of associated payments.
As for Proxama itself, this deal could provide investors with some confidence about longer term potential, following its rather disappointing Trading Update last month.
Posted by Peter Roe at '08:36'
Confirming signals sent in its recent trading update (see PageGroup sees faster UK growth), gross profits at the UK operations of international recruitment firm PageGroup (aka Michael Page International) grew by 10% on first half (to 30th June) to £68m, making its home base the fastest growing region. Management alluded to “greater confidence both in London and the regions” and skills shortages in some disciplines. Group headline revenues grew by 2% (8% at constancy currency) to £512m though gross profit grew a tad slower, trimming gross margins by 50 bps to a still mighty 51.5%. Despite this, operating margins expanded from 6.4% to 7.0%.
It seems to be the more diversified recruitment players that are benefitting most from the upturn in the UK economy. Recruitment is, after all, a ‘confidence’ game.
Posted by Anthony Miller at '08:32'
Loss-making voice and data provider, Daisy Group, has revealed that a consortium of investors has made a “preliminary approach” to buy the company. On 27th July, a consortium (comprising Toscafund Asset Management LLP, Penta Capital LLP and Matthew Riley, Daisy’s CEO) made a cash offer of 190p per Daisy share (trading in the company’s shares closed 3% down yesterday at 170p). Daisy has set up and independent committee of the Board to engage in preliminary discussions with the consortium.
Daisy, like other network services firms (e.g. Colt, see The IT services piece in the Colt growth puzzle), has been facing the not insignificant challenge of trying to recoup the decline in its traditional voice and data businesses by entering growth areas. The last full-year financials didn’t make for pretty reading; revenue (to end March 2014) was more or less flat at £352.7m, but the operating loss widened to £17.9m from £16.8m. That disappointing performance was despite three acquisitions during the year: DDCS (formerly 2e2’s data centres), MoCo and Indecs.
Indeed, acquisitions have been a key part of Daisy’s strategy to improve the product mix and shift both revenue and profit in the right direction. However, as we have warned previously, Daisy must be very careful that it is not just creating a collection of new capabilities that are not more than the ‘sum of the parts’ of the purchases. We wonder if the consortium is of the view that it can do a better job of ‘re-casting’ Daisy (perhaps by more radical means) under private ownership.
The consortium now has until 5pm on the 10th September to either announce a firm intention to make an offer, or to pull out.
Posted by Kate Hanaghan at '07:58'
Bangalore-based mid-tier Indian offshore services firm Mindtree has won a contract with the BBC to provide testing services for a range of its digital products and applications. The deal is reportedly valued at £25m.
This must be a very satisfying win for Mindtree UK/Europe head Mark Wilsdon (see New man minds Mindtree UK/EU) given the panoply of players already ensconced at the BBC. As I have said many times before, the big challenge for mid-tier offshore suppliers is to spot the spaces between the footprints left by the Indian majors. Clearly Mindtree has great eyesight!
Posted by Anthony Miller at '07:57'
I’ve written countless articles about Differentiating ‘the froth from the cappuccino’ using UK-based King (makers of Candy Crush Saga) as an example every time. See Virtual reality or Bubble? or Candy crush or bubble burst.
Last night King shares dived 20% to $14.50 – now over 35% lower than their $22.50 IPO just a few months ago in March 14 - as they reported yet another decline in spending by players of its top game.
Problem is that mobile players are fickle. Even my band of ‘little ones’ have become bored with Candy Crush and always played for free anyway. Angry Birds one month, Farmville the next, Candy Crush the next. I understand that Kim Kardashian:Hollywood is the in-game this month. Making a follow up hit seems to be even more difficult in gaming than it is in the music world.
I have no issue with that. Wish I could create a ‘one-hit-wonder’ game too. What I do take issue with is how investors always seem to value such enterprises on the blind belief, and against all the evidence to the contrary, that they will produce a follow up.
Posted by Richard Holway at '07:38'
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