HotViews Archive

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HCL still on a roll!
17 Apr 2014
The Currency Cloud raises $10m for cross-border payments
17 Apr 2014
SAP battling currency and cloud transition headwinds
17 Apr 2014
Atos makes a ‘friendly offer’
17 Apr 2014
IBM Q1 –slow progress
17 Apr 2014
blur revenue lower than expected
17 Apr 2014
WANdisco - Big Data shoots
17 Apr 2014
NCC builds on recent progress
17 Apr 2014
Microsoft nurtures a data culture
17 Apr 2014
Now Google disappoints
17 Apr 2014
Mindtree marches past major milestone
16 Apr 2014
300,000 TCS soldiers march onwards and upwards
16 Apr 2014
IFS outperforms major ERP suppliers
16 Apr 2014
Fujitsu to support Sky/TalkTalk broadband JV
16 Apr 2014
EU votes through new Financial Services regulation
16 Apr 2014
WCIT Enterprise Awards - Call for Entries
16 Apr 2014
Lombard benefiting from regulatory change
16 Apr 2014
Still pipedreaming in the Brazilian IT market?
16 Apr 2014
Quindell keeps stoking the boiler
16 Apr 2014
Alibaba boosts Yahoo
16 Apr 2014
Latest TMV Research: Did you miss something?
15 Apr 2014
Banks should fear Facebook foray into payments
15 Apr 2014
UK growth accelerates at PageGroup
15 Apr 2014
Pulsant: Sustaining double-digit growth
15 Apr 2014
Remembering Data Sciences
15 Apr 2014
Infosys – too early to call a trend
15 Apr 2014
Capita caps off M&A spree with AMT
15 Apr 2014
TMV Event sponsorship opportunity
15 Apr 2014
Agilisys attracts new clients with technology portfolio
14 Apr 2014
Fujitsu restructures operational units
14 Apr 2014
NEW RESEARCH: Finding the Winners in UK Payments
14 Apr 2014
Empowered SMS acquires OrderWork
14 Apr 2014
Government launches Digital Inclusion Strategy
14 Apr 2014
Smart acquisition for Smart Metering Systems
14 Apr 2014
Differentiating ‘the froth from the cappuccino’
13 Apr 2014

UKHotViews

 

Thursday 17 April 2014

HCL still on a roll!

logoIt was another stonking quarter for Noida-based offshore services major, HCL, with revenues (to 31st March) up 14% yoy to $1.36bn, a 3% uplift qoq. HCL also recorded its best operating margin for over a decade, at 24.6%, yet again beating that of Infosys (see Infosys – too early to call a trend), the once seemingly unchallengeable margin leader.

As usual, we'll have much more to say about the India-centric IT services players – including their UK performance – in the next edition of OffshoreViews.

Posted by Anthony Miller at '11:30' - Tagged: results   offshore  

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Thursday 17 April 2014

The Currency Cloud raises $10m for cross-border payments

logoLondon based cross-border payments as a service company, The Currency Cloud has just raised US$10 million from a consortium of venture capital companies, further emphasising the rate of change and potential growth offered in this area of the payments market.

The Currency Cloud provides a platform-based payments engine to help customers benefit from automated processing and reduce complexity in sending payments around the world. Customers include payments firm TransferWise, Fidor Bank as well as e-commerce customers and remittance transfer companies such as azimo.

Cross-border payments is an exciting area, attracting lots of capital and offering growth, as international payment flows are boosted by cross-border e-commerce, an increasingly mobile workforce and growing global trade.

We have already written about this dynamic market in our HotView “There’s money in remittances”, and Earthport, the cross-border payments provider with its focus on banks, features in our recent report “Finding the winners in UK Payments”. Facebook is also reportedly targeting the remittance market, see here. The Currency Cloud is yet another interesting player – we will watch with interest.

Posted by Peter Roe at '10:32' - Tagged: payments  

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Thursday 17 April 2014

SAP battling currency and cloud transition headwinds

LogoIt’s only Q1 14 but SAP looks like it is in for a bumpy year. It is already facing up to the turbulent transition to more of a subscription business model (it had previously pushed out its operating margin targets from 2015 to 2017 because of its cloud shift – see SAP prioritising cloud growth over margins) and today it warned that a strong Euro had impacted Q1 and would hit Q2 as well. Shares fell nearly 4% on the news.

On an IFRS basis, total revenue was up 3% to €3.7bn. Operating profit was up 12% to €9723m and the operating margin expanded from 17.9% to 19.5%. Both were lower on a non IFRS and cc basis but still positive - up 7% and 0.1pp respectively. IFRS net profit was €534m. As an indication of the currency headwinds, on a non-IFRS and actual currency basis, operating profit was up 2% to €919m. SAP says the currency effect will be worse in Q2. The increase in operating profit indicates SAP is keeping tight control on costs, despite acquisitions and the inevitable rise in operating costs that are part and parcel of the SaaS model. Operating cash flow was €2.35bn, a 9% increase, again showing strong control.

Cloud revenue is growing – it was up 60% but that only took it to €219m (€167m and 38% growth non IFRS and at constant currency) although annual billings were up 36% reaching an annual run rate of c€1.1bn. Licence sales are waning as a consequence - software revenue was down 5% to €623m (-5% to €657m on a non IFRS and cc basis). There were no revenue figures for HANA, just customer numbers (3,200 for HANA, approaching 1000 for Business Suite on HANA, although with no detail in terms of revenue/growth and the extent customers are using HANA these numbers are not very meaningful). There was no mention of mobile progress, which along with cloud and HANA is a one of SAP’s growth engines.

Overall it was a workman-like set of results, with notable pain points, that points to the extent of change to come. If SAP can keep control of costs it will maintain the confidence of the market

Posted by Angela Eager at '10:00' - Tagged: results   cloud   software  

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Thursday 17 April 2014

Atos makes a ‘friendly offer’

logoIt’s certainly nice to know they’re all friends in France. Atos management confirmed this morning that they had made a ‘friendly offer’ to buy Steria at €22 per share cash, just ahead of the announcement of Sopra’s ‘friendly offer’ to buy Steria (see Steria & Sopra - a very French rendezvous) in an all-share deal which the companies presented as having the same face value though, according to Atos, the market had assessed at somewhere between €18-18.50 per share. Atos’ offer will remain on the table until the Sopra EGM that would ratify the Steria acquisition. Atos management said “we will not make any other move towards Steria … as Atos will always keep a friendly approach”. Only the French!

Meanwhile, Atos reported its Q1 performance (to 31st March) which saw group revenues slip by nearly 2% like-for-like to €2.06bn. Atos UK was once again the growth leader at +1.6% to €396m; every other geo unit went backwards.

I’ve just had a long chat with Atos UK CEO Urusla Morgenstern and will write more about the changing shape of Atos UK in UKHotViews Extra later.

Posted by Anthony Miller at '09:55' - Tagged: trading   acquisition  

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Thursday 17 April 2014

IBM Q1 –slow progress

logoIBM’s Q1 figures failed to alleviate concerns over the company’s transformation to a higher growth/margin business focused on cloud, Big Data, analytics, social, mobile and security. (See our 4Q comment here)

Reported revenue was US$22.5 billion, down 4%, but down only 1% when adjusted for currency and the customer care outsourcing divestment. Net income fell 21% to US$2.4 billion (GAAP), hit by a US$870m “workforce rebalancing” charge, but boosted by $100m profit on the customer care divestment. Gross margin rose by 90bp to 47.6% (non-GAAP).

IBM’s portfolio-rebalancing is furthered by the sale of its standard server business to Lenovo, see here, but hardware sale remain under pressure with a 40% decline in mainframes and 20% declines in Power Systems and Storage. IBM expects investment in more powerful servers (POWER8) and in the OpenPower development alliance to slow this decline in later quarters.

The Software business was up 2%, despite the hit in operating systems as hardware sales declined. The key middleware offering, Websphere, was up again, by 12% and mobile software business doubled.

Global Technology Services grew 2% (adjusted) and IBM is relying on the US$1.2 billion investment in expanding the Softlayer cloud footprint, the introduction of BlueMix platform as a service, and the acquisitions of Aspera, see here, and Cloudant, see here, to boost credentials and revenue in its sub-scale cloud and big data businesses. Global Business Services was flat year-on-year but the Digital Front Office business pushed Consulting revenue up by 5%.

Progress is further hindered by large revenue declines in its “growth” markets, particularly China and Asia ex-Japan, with little sign of a near-term improvement.

IBM pushed hard in Q1 in its Race for Change, but it will take considerable time, and patience, for it to achieve its transformation goals.

Posted by Peter Roe at '09:46' - Tagged: cloud   big+data  

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Thursday 17 April 2014

blur revenue lower than expected

blurblur Group has released another (see Blur blurs the numbers) year-end update for FY13, indicating that revenue will be in the $5.3m to $5.6m range (FY12: $2.8m).

The company runs a platform where buyers can submit briefs for a variety of business services (e.g. legal, marketing, design, advertising, IT) for which suppliers can then bid. blur’s technology also helps buyers to select the best ‘pitch’ and then manage the invoicing and payment process. However, the company says that projects submitted to the exchange are getting larger and increasingly complex, which is extending the buying timeline. This means that revenue previously expected to drop in FY13 will now be recognised in FY14 (“and beyond”).

While FY13 revenue looks like it will almost double, bookings in the period leapt 825% to $22.2m. The first quarter of FY14 has seen “high growth” in both the volume of projects submitted to the exchange and average project values. The total value of projects submitted in the first three months of the new financial year was $73.7m, up from $3.89m in FY13 and $1.86m in FY12.

The growth curve in volume and value of projects submitted to blur’s exchange is notable. However, we’ll have to wait for the full release of FY13 results in May to learn more about the progress of the profit line. The company has previously said that it expects to be able to turn the business into profit in 2015 and reach margins in the high-20s by 2020.

Posted by Kate Hanaghan at '09:14' - Tagged: tradingupdate  

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Thursday 17 April 2014

WANdisco - Big Data shoots

LogoThere’s no change at WANdisco so far in Q1 – but that’s a good thing because it means bookings are still heading upwards at a strong rate. They were up 40% yoy to $4.2m in Q1. The mix of business is showing very early signs of a change however because the company is starting to take direct revenue from big data sales following contracts with British Gas and University of California Health. Big data technology revenue was only £0.2m but it was zero in the year ago quarter. That means the traditional ALM side of the business had $4m in bookings, a 33% increase.  

It was good to hear that OEM partner NSN is investing more in integrating WANdisco into its Hadoop architecture and that the relationships with Cloudera and Hortonworks are showing signs of delivering revenue. WANdisco is working with both Hadoop platform providers on evaluations that it expects will turn into live deployments later this year. These are in addition to the Proof of Concepts noted in Q4 (see here). All in all, WANdisco’s momentum indicates that organisations are starting to release budget for big data projects, a trend we expect to see developing over the year. The sums may be small but they are early shoots of growth. We will be taking a more in-depth look at WANdisco in the next month or so.

Posted by Angela Eager at '08:59' - Tagged: software   bigdata   tradingupdate  

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Thursday 17 April 2014

NCC builds on recent progress

lEscrow and assurance software provider NCC Group is showing continuing progress after delivering one of the strongest half year performances for a number of years in January (see Nothing quiet about H1 for NCC).

Revenue for the for the ten months to 31 March was up a substantial 12% to £90.4m, with organic growth at 10%, an improvement on 7% last time. The UK, NCC’s largest escrow division, is performing in line with expectations with growth at 6% (up from 3% last year). Meanwhile, the Assurance software testing business delivered a 15% increase in revenue, of which 12% was organic.

The newly launched Domain Services division (formerly Artemis) is where a lot of management attention will be placed this year as NCC attempts to move from early investment to revenue generation. The intention is to create a secure gated community, for companies, their end users and customers to interact securely over the internet. NCC is in discussions with initial prospects to sign up to the service, which should be available from the start of September.

The Domain Services division is proving a costly exercise, with NCC having spent £4m year to date, and £6.3m in total so far. In February it acquired the .trust domain name from Deutsche Post for an undisclosed amount. Meanwhile, plans to acquire the .secure domain in early 2015 will mean further significant investments to come. Let’s hope NCC can bring paying customers along to the party.

Posted by John O'Brien at '08:58' - Tagged: testing   software  

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Thursday 17 April 2014

Microsoft nurtures a data culture

LogoMicrosoft CEO Satya Nadella had another outing to reveal more of his “mobile first, cloud first” strategy this week, this time focussing on the data driven business and Microsoft’s own need to establish a “data culture”.

This formed the backdrop to the announcement of tools to enable organisations to utilise their own data and Microsoft’s desire to position itself as a key player in gathering, storing, processing and presenting that data. The route is via the combination of its database products (including SQL Server 2014 – the launch provided a platform for Nadella’s comments) and data centre capabilities plus the newly announced Analytics Platform System (a big data-play because it can handle data stored in relational databases and Hadoop systems), and a limited beta of Microsoft Azure Intelligent Systems Service (which is destined to analyse data from the Internet of Things). The Office suite is positioned to act as the interface for this pool of data. This is a valiant attempt to create a framework for handling data and to link the various Microsoft technologies together. The ‘data interface’ is a key component and while Office has the benefit of being a familiar solution it will not answer all the issues – work is needed on visualisations and enabling easy ad hoc data queries. There is also a need to link data to business processes which is not an area Microsoft is strong in. 

Since taking the top job Nadella has demonstrated a multi-platform commitment by taking Office to the iPad and other devices (see here), and created a stronger connection between Azure and the rest of the Microsoft portfolio (see here). The latest announcements centre on tools to handle the data flowing through mobile devices and the cloud, without which they would have no value. These three elements are coalescing into a strategy that is all about linking Microsoft’s many interests to create a coherent whole, something it has struggled with in the past. If Nadella can pull that off he will make a meaningful impact on the business and its work to prove that it can remain relevant in the new world order.  

Posted by Angela Eager at '08:54' - Tagged: software   analytics   bigdata  

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Thursday 17 April 2014

Now Google disappoints

GoogleAfter what seemed like a relentless slide in tech stocks, yesterday it felt that it might be safe ‘to get back in the water’. That was until Google (and IBM) reported after hours.

On the surface Google’s 19% rise in Q1 revenues yoy to $15.4b looked pretty good. Even better when you look at the ‘big numbers’ involved. Easy to grow a small company – much more difficult when the starting point is multiple tens of billions.

The problem was that the market was expecting even more. In particular, Google is having to work much harder for its bucks. Even though the number of paid clicks increased by 26%, as users turned to their mobiles, the ‘cost per click’ has dived – down 9% yoy. In a problem that seems to inflict so many of the high growth companies, profits growth – at a meagre 2.9% - lagged revenue growth.

Revenues in the UK grew 14% (same as US) to $1.58b; representing 10% of Google’s revenues. However, international revenues grew by 25% to $7.2b; 47% of Google’s revenues.

After a 3.75% rally in Google shares during the day, they ‘plunged’ c6% in after hours trading. If that is the price tomorrow, Google shares will have lost some 12.5% (or over $40b) since the beginning of March.

Little doubt that the market is extremely ‘edgy’ towards the high-flying internet stocks. Google is, of course, the granddaddy of all internet stocks and therefore many will interpret this as proof that the bull run is over. But is Google the ‘froth or the cappuccino?’ Internet search and its associated advertising is now a huge – and increasingly mature – market. It will not go away. Google is highly profitable and cash-generative. It is as secure as they come. But its really high growth days are probably over. All a bit reminiscent of what we wrote about Microsoft ten years back.

Posted by Richard Holway at '06:46'

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Wednesday 16 April 2014

Mindtree marches past major milestone

logoBangalore-based mid-tier offshore services firm Mindtree broke through the half-billion dollar barrier, closing the FY (to 31st March ’14) with revenues of $502m, 15% higher yoy. However, operating margins slipped back 50bps to 17.5%.

I recently met up with Miindtree Europe VP, Mark Wilsdon, who took over the role at the end of last after leaving India-centric major, Cognizant (see New man minds Mindtree UK/EU). I have absolutely no doubt that Wilsdon will add a much sharper sales focus to Mindtree’s European endeavours , so I suspect competitors will be seeing more and more of them in the UK in future.

As usual, we'll have more to say about the India-centric IT services players – including their UK performance – in the next edition of OffshoreViews.

Posted by Anthony Miller at '15:50' - Tagged: results   offshore  

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Wednesday 16 April 2014

300,000 TCS soldiers march onwards and upwards

logoThe close of the FY for India’s most successful offshore IT and business process services firm, TCS, marked the breakthrough of the 300,000 employee barrier, 9% higher over the year. But perhaps more significantly, headline revenues for the year to 31st March ’14 grew by 16% (17% at constant currency) to $13.44bn, translating to an average 4% improvement in headline revenue productivity. This contrasts with a 3% productivity decline the prior year. Operating margins for the year reached 29.1%, over two points higher than in FY13 and the best ever for TCS.

Almost any way you look at the numbers TCS appears to have shrugged off the malaise affecting some of its Indian peers. Management never gives ‘guidance’ on future performance, but it would be a brave person to bet against TCS beating the 13-15% FY15 offshore services growth forecast by Indian software and services industry association Nasscom, especially given that TCS comfortably exceeded Nasscom’s 13% industry growth forecast for FY14.

As usual, we'll have much more to say about the India-centric IT services players – including their UK performance – in the next edition of OffshoreViews.

Posted by Anthony Miller at '15:28' - Tagged: results   offshore  

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Wednesday 16 April 2014

IFS outperforms major ERP suppliers

LogoSwedish ERP provider IFS had a good start to the new financial year with Q1 revenue up 14% yoy to SKr 694m (including licence revenue up 24% to SKr 107m vs. 19% growth in the year ago period). There was an important change in earnings where the pre-tax figure reversed from SKr 94m in the red to SKr 21m in the black and the EBIT margin vastly improved from -15% to +4%. Last year was impacted by costs of SKr 92m to fund a major efficiency program.

As president and CEO Alastair Sorbie highlighted, Q1 was the continuation of a strong business story (see here) and the company attracted new customers and made additional sales to existing customers. It also won business against SAP in particular, but also Oracle and Microsoft, again showing off the market appetite for alternatives to the leading providers – and IFS is certainly delivering higher growth than the single digit figures delivered by the larger competitors and outperforming the overall ERP market. The pipeline is looking reasonably strong, providing cautious optimism for the rest of the year. Sorbie said the UK (a large part of its western European business) grew well in Q1, aided by the off shore oil industry but not exclusively driven by this sector.

Interestingly, in the light of SAP’s recent decision to offer everything on the cloud and with subscription pricing (see here) Sorbie sees little demand from IFS customers/prospects. What limited demand there is for cloud provision comes from North America (where Logicalis is the hosting provider and there is also interaction with Microsoft Azure), not the UK or the rest of Europe and he says he was not asked for single quote for a subscription last year. Evidently SaaS ERP is still struggling to find supporters.  

Posted by Angela Eager at '09:28' - Tagged: results   softtware  

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Wednesday 16 April 2014

Fujitsu to support Sky/TalkTalk broadband JV

fujitsuSky and TalkTalk are to create a joint venture (JV) with fibre network provider, CityFibre, to build a city-wide fibre-to-the-premise (FTTP) network in York. The companies say the network will be able to deliver broadband speeds of 1 Gigabit straight to homes and businesses in York. The new network will compete directly with BT and Virgin Media (Virgin Media already sells superfast broadband in part of York via its cable network).

The JV has enlisted Fujitsu to plan and build the new network, which will use CityFibre’s existing metro fibre infrastructure. It is expected that Sky and TalkTalk will start selling their competing broadband services to customers in 2015.

The Fujitsu element of the contract will be delivered by its newly-created Network & Telecoms business, which was previously the separately-run network and FTEL (Fujitsu Telecommunications) operations (see Fujitsu restructures operational units). The business will be led by Catherine Rowe, who was previously COO of FTEL. Financial terms of the JV have not been disclosed, so the value of the contract to Fujitsu is not known.

Posted by Kate Hanaghan at '09:25' - Tagged: contract   broadband  

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Wednesday 16 April 2014

EU votes through new Financial Services regulation

EUToday’s FT rightly gives front-page coverage to the European Parliament’s voting through of the regulatory package for the European financial services industry. This will shift the burden of any bank failure on to shareholders and bondholders rather than taxpayers and brings with it a wide-ranging overhaul of the regulations covering European capital markets.

We have consistently highlighted the importance of regulation to the financial services industry and to the software and IT services vendors supplying it. Subscribers to FinancialServicesViews can see our Market Trends and Forecasts document and Supplier Landscape report for background. Dealing with regulation is consuming a huge proportion of IT budget and represents a major component of the 80% of budgets devoted to keeping the lights on (Source: TechUK), reducing resources available for innovation and real change to meet customer expectations.

The decisions made in Europe represent only a milestone in the process as financial services companies will spend several years implementing the necessary changes to their systems and as various committees sort out the detailed standards. The sector now has three Europe-wide watchdogs as well as national regulators overseeing their work, almost certainly adding to delay and additional overhead.

The European regulations also raise the possibility of a weakened position for London as a financial centre. Messrs Dodd and Frank have got their act together much more quickly than the burghers of Europe and the greater certainty around US regulation is favouring investment there. We have already seen a substantial shift in derivatives trading into New York, and away from London. The regulators in Europe began the process with good intentions, but the implications for sector companies in terms of long-term competitiveness and innovation, and the vendor community supporting them, should not be underestimated.

Posted by Peter Roe at '09:21' - Tagged: financialservices   regulation  

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Wednesday 16 April 2014

WCIT Enterprise Awards - Call for Entries

picTechMarketView is well known for its championship of innovative UK tech SMEs through its acclaimed Little British Battler programme. But we’re also keen to support similar initiatives from respected independent institutions.

Therefore we are delighted to bring to your attention the WCIT Enterprise Awards which are presented each year to the UK’s leading technology entrepreneurs. The awards ceremony will be held at a gala dinner in central London on Thursday 12th June 2014, and this year for the first time the awards are supported by industry association techUK. The award categories are:

  • Young Entrepreneur
  • Emerging Entrepreneur
  • Developing Entrepreneur
  • Enterprise Award
  • Social Enterprise Award

There will also be a special Judges’ Award given to an entrepreneur who in the opinion of the judges is a role model for others. The awards dinner will be attended by industries luminaries including Stephen Kelly, COO, UK Government, Mike Tobin, CEO of Telecity, Julian David, CEO of techUK, and TechMarketView chairman Richard Holway. 

Entries close on Wednesday 7th May and you can get further details here.

Posted by HotViews Editor at '09:18' - Tagged: events  

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Wednesday 16 April 2014

Lombard benefiting from regulatory change

logoOne of the companies that will benefit from the regulatory bun-fight across Europe will be Lombard Risk Management, a provider of integrated collateral management, regulatory compliance and reporting solutions. Today they issued the briefest of trading updates, confirming that trading for the year to end March was in line with current market forecasts with strong contributions from its UK regulatory and risk business, repeating the strong performance of the previous financial year.

The company has suffered from delays to contracts as regulators extended deadlines and as customers wrestled with economic uncertainty as well as all the regulatory upheaval. See here for our first half comment. However, it seems that the confidence of the CEO John Wisbey has been borne out and revenue growth has been achieved through the year.

Lombard offers a range of structured solutions to enable companies to deal effectively and efficiently with regulatory reporting and risk management. This approach will be particularly attractive given all the changes to the rulebook. A notable coup was the March linkup with Broadridge Financial Solutions for a web-based collateral management solution, see here. It looks like the new financial year could be a busy one for the team at Lombard Risk Management.

Posted by Peter Roe at '09:06' - Tagged: financialservices   regulation  

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Wednesday 16 April 2014

Still pipedreaming in the Brazilian IT market?

picIn this latest bumper issue of BrazilViews, TechMarketView managing partner Anthony Miller looks at the prospects for suppliers in the Brazilian IT market and explains why he thinks industry growth forecasts are still far too optimistic.

This issue also includes Miller’s impressions of some of the global suppliers operating in the Brazilian market after meeting the heads of IBM Brazil, Wipro Latin America and Infosys Brazil. He also met the top team at a couple of tiny Brazilian firms and found that innovation is alive and well in the ‘land of the samba sun’.

In the UK Miller caught up with the EMEA head of Stefanini, the largest independent IT services supplier in Brazil – and was surprised to find that the company is running service desk operations for several top name international enterprises where you might have expected to find that service in the hands of the global IT majors.

If you have any interest in the Brazilian IT market, then you should download BrazilViews here and now! But of course you do need to be an eligible TechMarketView subscription service client. And if you’re not, let Deb Seth on our client services team point you towards the samba sun.

Posted by HotViews Editor at '08:13' - Tagged: brazil  

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Wednesday 16 April 2014

Quindell keeps stoking the boiler

lThere’s no denying the growth trajectory of Quindell, even if we still have reservations about how it gets there.

A Q1 trading update, shows first quarter gross sales (including pass through revenue) at £162.9m, compared to £167.3m for the whole of H1 last year. Quindell is now talking about delivering significant organic growth, but there is also clearly a lot of inorganic growth in there too. Adjusted EBITDA profits meanwhile are looking strong at £65.9m vs. £54m in H1, giving Quindell an adjusted EBITDA margin of 40.5% vs. 32% last time.

Cash however had dropped to £150m from £200m at the end of March (see Quindell proving its point), after Quindell paid out a 'significant amount of cash on acquisitions and investments completed in the period'. The most notable of these was Himex in February (see Telematics investments getting dearer for Quindell).

Since the quarter end, a further £15m in cash will have been spent on the new RAC joint venture (see here). Quindell’s is a cash hungry business, so managing this is critical. A tighter grip on future investments may be needed.

Posted by John O'Brien at '08:06' - Tagged: bps   insurance  

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Wednesday 16 April 2014

Alibaba boosts Yahoo

YahooIn Jan. 14 I wrote Yahoo joins ranks of the disappointing. I could repeat the same headline for last night’s Q1 results. The core Yahoo business was flat at $1.1b as were EPS. Marissa Meyer has been in role for two years and seemed for some reason to be ‘really pleased’ with this performance. Meyer pointed to growth in display advertising and increased use of Yahoo on mobiles. But it is running hard in these areas just to keep pace with declines elsewhere. I’ve always rated Yahoo Finance and still can’t completely understand why Yahoo doesn’t concentrate on its niche product areas – where it has real USP – rather than being an ‘also ran’ in the mass market.

But few were really looking at Yahoo’s core business last night as Yahoo revealed that Alibaba – the Chinese e-commerce concern where Yahoo owns a 24% stake - had grown by a massive 66%. This sent Yahoo shares up 10% after hours.

As Alibaba is a private company which plans an IPO shortly, one of the only ways for mere mortals to own shares is via Yahoo. This has led to Yahoo shares soaring (they had risen by c200% at their high since Meyer took over although they have eased lately in the great tech sell-off) even though Yahoo’s core business has gone nowhere.

But the Alibaba IPO is no longer a guaranteed money-spinner. They are in exactly the frothy area of ‘tech’ where share prices have plunged of late. See my Differentiating ‘the froth from the cappaccino’ article on Monday.

Posted by Richard Holway at '06:33'

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Tuesday 15 April 2014

Latest TMV Research: Did you miss something?

TMV logoOur latest Quarterly Research Summary is hot off the press – get a full update of the research published by the TechMarketView analyst team over the last quarter by downloading it here.

‘Must reads’ from the last few months include some reports that have only just been published and don’t make it into the research summary. FinancialServicesViews subscribers should be sure to read Peter Roe’s latest report: Finding the winners in UK payments. Whilst avid readers of PublicSectorViews research won’t want to miss Georgina O’Toole’s analysis of the UK Public Sector SITS Suppliers’ Cyber Security Offerings.

Other highlights from the first quarter include two cloud-focused reports. Peter Roe analyses Cloud Services in the UK Financial Services Sector in FinancialServicesViews and Kate Hanaghan looks at How Infrastructure Services firms are fighting for their place in the Cloud market for our InfrastructureViews research stream.

Also ‘too good to miss’ are the UK Public Sector SITS Supplier Landscape Report 2013-14 – PublicSectorViews’ annual in-depth analysis of all the movers and shakers in the UK public sector markets – and Capturing the Digital Front Office Opportunity, Angela Eager’s excellent analysis of the world of front office digitisation for ESASViews subscribers.

BusinessProcessViews subscribers should check out John O’Brien’s latest analysis of Capita and Serco. Plus there is a string of reports from the Foundation Service including those providing our regular scrutiny of developments in UK SITS Venture Capital, Quoted Sector and Corporate Activity.

To download our full Quarterly Research Summary, whether you’re a subscriber or not, click here.

If you’ve not yet succumbed to the temptation to subscribe to one of our in-depth research streams and you'd like more information, email Deborah Seth on our Client Services team for details of our 2014 subscription packages.

Posted by HotViews Editor at '10:23'

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Tuesday 15 April 2014

Banks should fear Facebook foray into payments

logoFacebook is reportedly weeks away from gaining approval to act as an e-money institution, enabling it to offer remittances and other payments services across the European Union. This move could have a major long term impact, not only boosting Facebook’s revenues, but also changing the way people bank and interface with the financial services sector.

Facebook had almost 760m Daily Active Users at end 2013, with a growing proportion of mobile-only users. Total revenues were $7bn from advertising and almost $900m from payments and other fees. 31% of revenue was generated in Europe.

Facebook certainly has its constituency. Although many users may be reluctant to entrust the social media giant with financial information, many millions do disclose huge amounts of personal information over the company’s network. It should be straightforward for the Facebook team to present an appealing proposition to its user base, offering a completely different approach to that of the banks and using partners to build a global financial services business. They could then use the wealth of data Facebook already has across its user base to provide micro-segmentation services to businesses, and personalised offers to users. A powerful combination, providing a potentially substantial revenue boost.

In our recently published report, Finding the Winners in UK Payments, we point out the already severe competition as companies battle to recruit both end-customers and retailers – a concerted foray by Facebook could make this even more difficult. In addition, recent studies highlight the lack of a relationship between many young people and the banks. The provision of payment services and later on a broader portfolio of financial products through familiar interfaces, like that of Facebook, could represent a serious threat to the long-term customer base of the banks. 

Posted by Peter Roe at '09:38' - Tagged: social+media   payments  

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Tuesday 15 April 2014

UK growth accelerates at PageGroup

logoGrowth in net fee income (gross profit) at the UK operations of UK-headquartered recruitment group PageGroup (aka Michael Page International) accelerated in Q1 (to 31st March ’14) to over 8%, ahead of the 5% growth recorded in the prior two quarters. This is in line with most peers (e.g. see Perm hiring boosts Hays UK), and leaves more ICT-focused SThree as the only one of the ‘majors’ missing out on a resurgent market on its home turf (see SThree UK business still in doldrums).

Posted by Anthony Miller at '09:25' - Tagged: trading   recruitment  

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Tuesday 15 April 2014

Pulsant: Sustaining double-digit growth

pulsantFY13 financial results from Pulsant show the firm had another year of good growth – thanks to both existing customers and new logos. The managed hosting, co-location and cloud company grew 12% to £43.7m (slower than the 17% in FY12), while EBITDA (before exceptional items) increased 23% (+25% in FY12). This performance reflects the growth we are seeing in Pulsant’s primary market - mid-market data centre services - where demand remains high (read more here: Mid-market Data Centre Services: Opportunities and Competitors).

Pulsant has 10 data centres in five UK locations, with two main support centres in Reading and Edinburgh (its acquisition of ScoLocate in December 2012 enabled it to spread north of the border). Pulsant’s CEO is Mark Howling, and readers might remember it was he that led Digica when it was acquired by Computacenter in 2007 (see Farewell to Digica (well, its brand, anyway)). Now in his fourth year at Pulsant, Howling has built a solid business with an expanding margin (the EBITDA margin increased from 33% to 36% in FY13). While the performance of the market is helping to drive topline growth, Pulsant’s combination of services and approach to servicing customers are also key contributory factors.

In this HotViewsExtra piece, Research Director for InfrastructureViews, Kate Hanaghan, explores the challenges Pulsant (and other infrastructure services firms for that matter) faces as hyperscale IaaS players such as AWS and Google gather ever-increasing pace. Having just met up with Pulsant's CEO, Mark Howling, she looks at how the company's focus on the mid-market, and on complex customer requirements, are currently helping it to defend its ground and sustain its growth rates.   

Subscribers can read the piece here: Pulsant sustains double-digit growth.


If you wish to subscribe to InfrastructureViews, please contact Deb Seth for more information.

Posted by HotViews Editor at '09:18' - Tagged: results   cloud   iaas  

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Tuesday 15 April 2014

Remembering Data Sciences

MFToday Micro Focus announced that they are to split the roles of chairman and CEO (Kevin Loosemore currently holds both as Exec Chairman) Bluntly I don’t know why they don’t just appoint Mike Phillips (current CFO) as CEO and be done with it. Stephen Murdoch becomes COO.

AtkinsAlso announced that Richard Atkins becomes an NED and Ch of the Audit Committee. Many readers will know Atkins from his many NED roles of late. I first met him in the early 1990s when, as CFO, he masterminded the MBO of what was to become Data Sciences from Thorn EMI. Thorn EMI was ranked #1 for UK Software & Services in my first Holway Report in 1988 when they also owned the bureau Datasolve.

Then, in 1996, Atkins managed the acquisition of Data Sciences (then led by Andy Roberts) by IBM.  I had been commissioned to do the marketing due diligence for Data Sciences for their IPO. It was a big contract for me – in fact the biggest I had ever been awarded. A few weeks into the process Atkins phoned me to tell me to stop as they’d had a better offer from IBM. I was gutted until he told me that I’d get paid anyway. So my biggest contract and I didn’t have to do any work. Never had another like that since - but still looking!

Atkins had brought considerable financial discipline to Data Sciences. Indeed it was a model of how to ‘measure/monitor’ an IT Services company. I’ve heard it said within IBM that they based much of how they measure things at IBM Global Services on what they inherited from Data Sciences. Indeed, the mistake that many products companies made when they tried to move into services was to use the same internal metrics. The two types of business are so very different.

Posted by Richard Holway at '09:02'

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Tuesday 15 April 2014

Infosys – too early to call a trend

logoThe focus of media comment on today’s Q4/FY results (to 31st March ’14) at Bangalore-based offshore services major Infosys was the near-doubling of FY growth rate to 11.5%, ahead of management’s most recent guidance. But the story ‘under the covers’ bears closer scrutiny.

In fact, Q4 revenues declined sequentially for the first time in two years. Management’s guidance for FY15 – at 7-9% revenue growth – was even more muted than this time last year (8-10%), barely half the 16-17% growth rate forecast for 2015 by now larger rival Cognizant (see Cognizant UK – 'too early to call a trend') and well below the 13-15% offshore services growth predicted by Indian software and services industry association Nasscom for FY15. For Infosys too, it is too early to call a trend.

For the record, Infosys ended the year with revenues of $8.25bn. Operating margins, at 24.0%, were nearly two points down on the prior year.

A few days ago Infosys also advised that CEO SD Shibulal was seeking early retirement; he was due to retire this time next year but will step down as soon as a replacement is appointed. Headhunters are on the lookout for external candidates despite the recent elevation of internal front-runners BG Srinivas and UB Pravin Rao to joint-COO (see More management shuffling at Infosys). The power behind the throne remains with returning executive chairman NR Narayana Murthy, ably assisted by son Rohan.

Posted by Anthony Miller at '08:36' - Tagged: results   offshore  

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Tuesday 15 April 2014

Capita caps off M&A spree with AMT

lCapita’s new CEO Andy Parker is putting his mark on the company’s M&A strategy, making its second significant acquisition in the space of two weeks.

After paying £80m in cash for Scottish wide area network partner Updata earlier this month (see Updata SWANS off to Capita), Capita is now shelling out a potential £105m in cash (£82m upfront) to purchase AMT-SYBEX Group Ltd, a specialist software provider for energy and utility firms. The deal values AMT at 2.3x forecast 2015 revenue, and it should be highly profitable, forecasting an operating margin of 29%.

These deals values are big by Capita’s standards. Capita spent a total of £271m on 13 acquisitions last year under former CE Paul Pindar. Under Parker, Capita has spent £185m on these two deals alone, which could be a reflection of higher values, but we think more strategic opportunities.

AMT looks like a very smart move by Parker to break into a new and emerging area of data analytics for the utilities and transport sectors. AMT’s software provides both mobile technology and smart data management for clients including four of the `big six' UK energy companies, National Grid, Network Rail and Transport for London.

Its software sits squarely in the IT-enabled support services space (see IT-enabled support services: opportunities in a converging space), helping manage company assets, carry out mobile inspections, and perform maintenance work on infrastructure - so good news for Capita's broader BPS business. AMT's newer applications enabling data capture from smart meters are more promising still. Parker sees data analytics having the potential to ‘improve customer attraction and retention and get businesses and customers better connected through using digital and other channels’. We predicted it would be a hot topic this year (see Predictions 2014 - Race for Change).

Subscribers to TechMarketView’s BusinessProcessViews research stream will be able to read about the emerging role of data analytics in business process services in a new report out soon.

Posted by John O'Brien at '08:26' - Tagged: manda   bps   analytics  

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Tuesday 15 April 2014

TMV Event sponsorship opportunity

TMV logoTechMarketView’s annual Presentation & Dinner will be held on Wednesday 17th September 2014. During the evening, 200 of UK tech’s ‘great and good’ will gather at BAFTA in London to hear the TechMarketView analyst team, led by our Chairman Richard Holway MBE and Managing Partner Anthony Miller, share views on the trends and suppliers shaping the UK software, IT services and business process services market. Last year’s inaugural event was a huge success and this year’s, which builds on our 2014 ‘Race for change’ theme, promises to be an equally high profile date in the UK tech calendar.

For the first time we are inviting applications to become the sole sponsor for this prestigious event. The sponsorship package includes a five minute speaking slot before the dinner as well as the right to have your company logo on promotional material and prominent at the event itself. If you’d be interested in learning more about this sponsorship opportunity, please contact TechMarketView Director Tola Sargeant for full details.

You’ll find more detail on the TMV Presentation and Dinner 2014 itself within the Events pages on our website.

Bafta images

Posted by HotViews Editor at '07:00'

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Monday 14 April 2014

Agilisys attracts new clients with technology portfolio

Agilisys logoAgilisys has had a strong end to its year ended 31st March 2014, signing five new Agilisys Digital customers in the last three weeks; a 100% success rate on the last five deals bid. Agilisys Digital is the company’s open, scalable, platform providing citizens with a ‘MyAccount’ portal and giving access to personally relevant information and most major transactional services (see Agilisys’ leverages Blenheim Chalcot relationship).

The new clients are Wrexham County Borough Council, Melton Borough Council (the first for 'Agilisys Digital for Districts'), Ealing Council, Wandsworth Council and Remploy (the first non-local government client). Ealing & Wandsworth Councils procured via the Wandsworth Customer Portal pan-London framework. All the others were via the G-Cloud framework. All the new Agilisys Digital clients also signed up to Agilisys Engage, the behavioural change and personalisation software that Agilisys launched last year (see Agilisys nets digital software company).  Other new clients that have recently signed up for Agilisys Engage include Rochdale, Cheshire West & Chester, and the University of East London (the latter win demonstrates its applicability to other public sector bodies).

Moreover, Agilisys has also signed up two new clients in the last four weeks for its Agilisys Revenue Collection Services and expects to sign its first Agilisys Automate client by the end of April (see Agilisys ‘automates’ with LBB Celaton); great news for Agilisys and for its ‘Automate’ partner, Little British Battler, Celaton (find details of the Little British Battler programme here).

These wins are further evidence that Agilisys is successfully positioning its new Agilisys technology portfolio as public sector organisations look for innovative ways to transform the way they digitally engage with their users. As we highlighted this morning (see Government launches Digital Inclusion strategy), the Government is eager to encourage more citizens online, enabling them to take advantage of “simpler, clearer, faster public services and transparency through open data”. By integrating Agilisys Digital with Agilisys Engage, the technology complements local authorities’ channel shift agenda, making it more likely that citizens will be directed to the right part of the website first time. For Agilisys, its technology portfolio is opening up new avenues as business, as the market for large-scale ITO and BPO deals (its traditional hunting ground) becomes more and more difficult. Agilisys now has 12 customers of Agilisys Digital and claims to have another 10-12 looking to make decisions in the next 6 months.

Posted by Georgina O'Toole at '15:14' - Tagged: localgovernment   contract   software  

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Monday 14 April 2014

Fujitsu restructures operational units

fujFujitsu has made a number of changes to the operational structure of the UK business, while announcing a reshuffle of senior staff. The network business has been combined with FTEL (its telecoms business) and will be led by Catherine Rowe. The company is also combing its end user support services and hosting businesses, which will now be led by Helen Lamb (who becomes Executive Director for Managed Services).

Steven Cox will become Executive Director for the Public Sector, and will be tasked with improving the “shape and strategy” of the company’s PS business. Meanwhile, Nigel Shaw becomes the new lead for the Business & Application Services division.

Under CEO, Duncan Tait, the UK’s performance has improved, particularly in terms of profitability (see UPDATE: Fujitsu Q3 UK performance). We suspect he feels more improvements can be made to the cost line by merging the operational units. And, furthermore, that the new leadership team can boost the topline. Last month its was announced that Tait will be promoted to Corporate Senior Vice President and will lead the EMEIA region (see UK’s Tait promoted in new Fujitsu global organisation structure). However, there has still been no announcement as to whether he will be directly replaced in the UK, or whether he will retain that responsibility too.

Posted by Kate Hanaghan at '09:31' - Tagged: appointments   operationalstructure  

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Monday 14 April 2014

NEW RESEARCH: Finding the Winners in UK Payments

changeThe UK payments business used to be staid, conservative and frankly rather boring. This has all changed with the rise of Internet shopping, the massive growth in penetration of smartphones and significant changes in how people bank, buy and pay. As a result, we are seeing a lot more attention focusing on the companies serving this important and very diverse sector, with many new start-ups, embryonic business models and some very fancy valuations. It is increasingly difficult to identify the companies that will be successful in this very dynamic, but potentially very lucrative industry.

The payments value chain is becoming even more complex. Not only do players have to deal with many different payments authorities and regulatory bodies, they now have to deal with new channels to market, opened up by online and mobile technologies. Companies are also looking to better exploit transaction-related data, combining it with information about the consumers preferences, history and location to generate additional business.

In this, the second report from TechMarketView on the payments business we consider the various elements of the payments value chain, identifying key issues and routes to success. We then focus on five potential winners in this space. From the large, highly valued but well-connected Monitise to the smaller, more focused newcomers of Proxama and Earthport and looking at the full service players of CGI and the Atos subsidiary, Worldline. This market segment is likely to undergo many far-reaching changes over the next few years and software and IT services vendors need to be aware of what drives success to benefit from the rapid growth that this period of change will generate.

Subscribers to FinancialServicesViews can access this report here.  To subscribe, or to learn more about this research stream, contact Deb Seth of our client services team.

Posted by Peter Roe at '09:00' - Tagged: mobile   payments  

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Monday 14 April 2014

Empowered SMS acquires OrderWork

empoweredDunstable-based Empowered SMS has acquired OrderWork, one of TechMarketView’s Little British Battlers from 2013 (Little British Battlers - Q1 2013). Both firms provide professional and support services to resellers and system integrators in the UK. Financial terms of the deal were not disclosed.

Empowered SMS says that the acquisition of OrderWork will help it strengthen its distributed mass deployment services and give it new capabilities in high volume installations. OrderWork provides ‘white labeled’ engineers and support services to IT resellers and High Street consumer electronics retailers in the UK (e.g. John Lewis). Its business model is focused on delivering both fixed price, fixed scope work and on IT specialist recruitment. It has built a proprietary service management technology that tracks its technical workforce of subcontractors (600 active). Channel customers include Fujitsu, Capita and Computacenter.

However, this can be a very tough market. Resellers and SIs alike (themselves operating in tough markets) have squeezed on prices and this is reflected in OrderWork’s finances. FY13 revenue dropped from £4.47m in FY12 to £3.21m. Losses (EBIT) deepened from £157k to £412k. Indeed, OrderWork has been in business for over six years and has never made a full-year profit. Empowered SMS will need to remove costs wherever it can. At the same time - and like its peers - it should make ongoing investments to improve pro-active support (i.e. preventing problems before they occur or impact users) and reduce reliance on field engineers through increased automation of services.

Probably the best-known provider of support services via a partner model is Phoenix – which has long-since dropped the partner-only approach. Its more recent fortunes (e.g. Tough times for Phoenix in H1) demonstrate how tough the IT support and maintenance markets can be - even for players with scale and brand profile.

Posted by Kate Hanaghan at '08:35' - Tagged: acquisition  

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Monday 14 April 2014

Government launches Digital Inclusion Strategy

Digital BritainThis morning the Cabinet Office has announced the launch of its Digital Inclusion Strategy, which commits to bringing more people online for “economic growth and social inclusion”. The ambition is to reduce the number of people offline by 25% by 2016; to achieve that goal would require getting 2.7m more people online over the period.

In support of the strategy, a new UK Digital Inclusion Charter has been signed by 40 public, private and voluntary sector organisations, so that the Government no longer tackles digital exclusion in isolation. Signatories include Asda, which has committed to providing free face-to-face advice sessions, and EE, which will hold a “National Techy Tea Party”.

With the goal of supporting “economic growth and social inclusion”, one of the aims of the Digital Inclusion Charter is to boost the digital skills of SMEs and Voluntary, Community & Social Enterprises (VCSEs), so that they are equipped with the skills they need to succeed. The Digital Inclusion Strategy fulfils the commitments made in the Government’s Information Economy Strategy (see Information Economy: a surfeit of strategies?)

Though only alluded to in the release, getting more people online is also crucial to the success of numerous programmes across UK Government. The ‘digital by default’ agenda spans all areas of the UK public sector but progress in some areas has been slower than might have been hoped. Local authorities are pursuing a channel shift agenda to reduce costs and improve citizens’ access to public services (see UK Public Sector SITS Market Trends & Forecasts). But numerous surveys, including one commissioned by the Department for Communities and Local Government (DCLG), have shown that voice remains the primary means of contact and that many authorities are not seeing the savings from digitisation of services. In addition, digital-by-default projects in central government aim to save £1.7b by 2015, but will also require more people to transact with Government online; Universal Credit programme pilots included testing help for claimants to build online skills to claim Universal Credit and look for jobs.

Unless more people are encouraged to use digital channels, it will be tough to realise projected savings from ‘digital by default’ programmes. However, though the intention is good and Government is no longer tacking the issue alone, it is tough to envisage how these initiatives will achieve the desired result - if the Asda and EE examples are they best action plans they have up their sleeve, it's hard to see how they will have much impact. Let's hope there is more substance behind the Charter than is revealed. Perhaps more important is making sure that 'digital inclusion' is a core part of individual organisations' channel shift programmes; this is happening on some projects but certainly not all.

Posted by Georgina O'Toole at '08:30' - Tagged: public+sector   strategy   government   digital  

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Monday 14 April 2014

Smart acquisition for Smart Metering Systems

logoGlasgow-based gas meter installation and asset management firm Smart Metering Systems (SMS) has made its first acquisition since its IPO in July 2011 (see Smart Meter smartness?), spending £14m (cash and shares) to buy Cardiff-based meter management firm Utility Partnership Limited (UPL). UPL turned over £11.1m in FY13 (to July 31st) and EBITDA of £2.0m.

Smart meters are at the heart of many of the ‘smart city’ propositions from major IT services firms, no more so than here in the UK. Indeed, we have waxed lyrical about the Government’s ill-considered plan for a nationwide rollout of smart meters. In August last year the government  awarded huge framework contracts for the £11.7bn project (see Capita & CGI amongst smart meter winners) just a few months after announcing more than a year’s delay in the commencement of the rollout, which will now not start until autumn 2015, i.e. after the next general election.  If I were a gambling man …

While this delay will of course have been a disappointment to SMS, electricity suppliers continue to roll out smart meters for good commercial reasons (theirs rather than consumers’ I would warrant). In fact, SMS’ share price jumped on the news of the delay.

SMS is looking more and more like a fantasy stock. Its shares stood at 420p at the end of last week – seven times its 60p listing price – valuing the company at more than £340m. This is over 12x FY 13 revenues (£28m) and 50x earnings, which makes SMS look rather like a ‘big data-cum-internet of things’ play – which in a way it is.

Posted by Anthony Miller at '08:25' - Tagged: acquisition   smartmetering  

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Sunday 13 April 2014

Differentiating ‘the froth from the cappuccino’

capI feel like I am reliving the year 2000 month-by-month 14 years on. Back in Feb 14 I reprinted my Jan. 2000 front-page Systemhouse article Emperor’s New Clothes warning of the dangers of the sky high valuations of companies masquerading as tech stocks. King (Candy Crush) AO.com, Just Eat, BooHoo.com were just a few of the many examples. My fear was that a bubble burst in these stocks would send the whole of the ‘proper’ tech sector crashing – just like it had done in Apr 2000.

The internet bubble started to deflate in March 2000 and just kept falling for over two years. It affected every stock regardless. Sage had hit £10 on March 2000 – the equivalent of the P/E of 180. Sage had nothing to do with the internet. Sage stock fell to 113p by Apr  2003 and is still only 390p today.

The front-page of SystemHouse Apr 2000 was headlined Correction or Collapse? I predicted the latter – indeed, I very boldly forecast ‘a 60% reduction in the SCS Index’. I was wrong – it turned out to be 90% by the time of its 2003 nadir.

So I guess I could/should ask the same Correction or Collapse? question again.

In the last month, NASDAQ has fallen by nearly 7% and all the new IPOs listed above have crashed from their post IPO highs and are now all trading at <their IPO price. In their wake they have taken all the high flying internet stocks - like Amazon, Facebook, Twitter, Linkedin – sharply (20-40%) lower. The SaaS players like Workday, Netsuite, ServiceNow etc have been particularly badly hit (all down 30%+) in the last month). Even Salesforce has fallen 20%+. This should come as no surprise to HotViews readers as we have been warning about their particular business models for years.

But this time the ‘non bubble’ stocks have been much less affected. In the UK, the two ‘tech’ components in the FTSE100 – ARM and Sage – are only off 10% from their highs and the FTSE SCS Index is down ‘only’ 5.8% from its high. Indeed globally the big, profitable, cash-generative tech players – like HP, IBM and Microsoft - are actually UP in the same period that the others have crashed.

This time around the market does seem to be capable of Differentiating ‘the froth from the cappuccino’. Of course, if there was a more general equities sell off (Crisis in Ukraine? Interest rate rises? A repeat of the financial crash?) then these tech stalwarts would be affected too.

My view is clear. The frothy stocks will be hit HARD but the established tech stocks will not. Indeed, they will be seen by many fund managers as safe havens with their healthy cash balances and profits.

Posted by Richard Holway at '16:41'

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