Megabuyte - Technology sector intelligence

IT services and outsourcing group Logica has reported first half results this morning and announced a significant increase in its dividend policy; news of which has pushed the shares up nearly 6% in early trade. Revenues for the six months to June slipped 1% to £1.87bn whilst adjusted operating profits were flat at £125m; representing a margin of 6.7%. Whilst we applaud the dividend move, our fundamental concerns over Logica’s competitive positioning and strategic direction remain. Read our full conclusions following the results in Newswire Plus.

3UK still going nowhere

Hutchison has reported a fairly dismal set of results for 3UK the first half of the year, showing revenues down 9% to £720m, driven by relentless declines in ARPU, which were greater than its peers.  Headline losses fell 80% to £20m, though most of this reduction reflected lower amortisation due to the 3G licence being extended indefinitely. In common with its peers, the UK is faring much worse than other mobile markets for Hutchison. Overall, after 10 years, Hutchison has yet to turn a profit on 3G and is probably years away, if ever, from generating a cash return on its investment. Premium subscribers can read our full thoughts in Newswire Plus.

Inmarsat interims buoyed by Segovia

Inmarsat has delivered a robust set of interim results, with 12% revenue growth and 15% EBITDA growth, though we estimate that the growth net of the Segovia acquisition was more like 4.5%. The half year figures also imply a slowdown in the second quarter. Separately, Inmarsat has announced a new $1.2bn investment in Ka-Band, described as a $1.4bn opportunity. A current year 28x PE makes Inmarsat one of the more expensive stocks in our universe, particularly against non-stellar organic growth rates, though the 3.1% dividend yield is reasonably attractive. Read the full review in Newswire Plus.

DT and TI look to international markets amid domestic weakness

Deutsche Telekom and Telecom Italia’s quarterly results ending June highlight tough market conditions for the European telecom industry. Amidst a shrinking domestic subscriber base, Deutsche Telekom managed to stem revenue declines from German operations, while Telecom Italia still continued losing revenues in Italy. Managements of both companies attempted to assure investors that they will be able to meet their respective full year guidance. Read our conclusions on the results in Newswire Plus.