Megabuyte - Technology sector intelligence

Cable & Wireless Worldwide has issued a profits warning, blaming UK government spending cuts, in one of the most poorly worded and uninformative trading updates that we have ever seen.  A back of the envelope calculation suggests that Public Sector margin expectations have fallen by up to a quarter (£40m), due primarily to cut backs in movers and changes business. It would appear that CWW management have had their heads in the sand for the last 2-3 months, and were seduced into expecting continued strong PS performance after last year’s 7% growth.  Read more in Newswire Plus.

IBM reports lacklustre results

Industry bellwether IBM posted lacklustre Q2 2010 earnings yesterday. Revenue improved slightly by 2% to $23.7 bn with global technology services, global business services, software and systems and technology segments registering a growth of 1.4%, 3.3%, 2.1% and 3.4% respectively. Middleware revenue, including WebSphere, Information Management, Tivoli, Lotus and rational products registered a strong growth of 9% to $3.3 bn. Signed services contracts, a key performance metric declined 12% to $12.3 bn, while the services backlog remained flat at $129 bn. The company’s strategy of entering into high margin software markets seems to be having positively impact the bottom-line, with net profit up 9% to $3.4 bn. See Newswire Plus for more.

Synchronica to acquire iseemedia for customers and technology

Mobile email provider Synchronica has announced the proposed acquisition of Canadian-listed peer iseemedia, which at a stroke gives the company a strong market position in India, increasing its addressable market by almost a third, and delivers strong patent-pending technology for document transcoding. Synchronica is also targeting a fund raise of CND3-7m. As with the March Colibria transaction (Premium Plus readers, see here), Synchronica is enhancing its product portfolio and client base, at a time when mobile email is going through something of a land grab for suppliers. Read more detail in Newswire Plus.

Megabuyte Mobile Peer Group Review published

We publish this morning our regular review of the Mobile sector covering trading news, share prices, valuations and M&A trends. Strong share price performances in the last month include WIN (+17.5% - M&A driven),  Bango (+9.7%, post results) and Synchronica ( +7.4%, also post results). Going the other way were Vyke (-13.2%, after forming a new JV), Mobile Tornado (-9.9% despite a major new contract) and Velti (-9.4%). The sector trades at a 21-54% valuation discount to software companies and at a 15-49% discount to the broader megabuyte universe. In terms of results, Synchronica reported 158% growth in interim revenues and a significantly reduced EBITDA loss, Monitise reported that FY09/10 revenues will be c£6m (+120%), though with slightly higher than expected losses, and WIN revised down profit expectations for the half year to June to the same as last year. Major sector newsflow included the ongoing bid for WIN, Monitise raising £32.4m and private femtocell players PicoChip and Ubiquisys (who we initiated coverage on during the month) raising $20m and $9m respectively. Premium subscribers can download the report here.