Megabuyte - Technology sector intelligence

Anite peer Spirent has released a strong set of interim results, with revenues up 9%, orders up 24% and operating profit up 36%, and a positive outlook. Growth was strong in data connectivity and LTE testing products, and in Europe.  Whilst more broader based that Anite, Spirent’s positive results support Anite’s growing confidence for its testing business, and particularly LTE, as expressed at Anite’s recent full year results (Premium Plus readers see here). Read our full review of Spirent’s results in Newswire Plus.

OLM looks forward to a stronger performance in 2010

We initiate coverage this morning on OLM Group. Founded in 1991, OLM Group is a provider of IT solutions and business consultancy services to the UK care sector. The company has four subsidiaries namely, OLM Systems, OLM Professional Services, Pavilion and Hytec, catering to different domains of health and social care sector including adult and children care organizations, local bodies and individual health practitioners. Since inception, the company has grown both organically and through acquisition. Helped by these acquisitions, OLM’s turnover increased from £13.1m in FY 2006 to £18.2m in FY 2008. For FY 2009, the company’s revenue rose by 15.5% to £21.0m but the company incurred an adjusted operating loss of £0.6m. Despite the weaker profitability in 2009, the commentary with the results suggests that, with the recent acquisitions now bedded down, 2010 will be see improved profitability. Premium subscribers can read our full initiation note in Newswire Plus and Premium Plus subscribers can view the full OLM profile on the Megabuyte database here.

Megabuyte August running

As we enter the summer quiet period, Megabuyte will be moving onto its summer running schedule. This means that for two weeks from 9th August, there will be no morning Newswire and we will be back on Monday 23rd August. We will of course keep subscribers informed of any significant stories that come out during that period.

Maxima correction

In our piece on Maxima’s results yesterday, we mistakenly said the revenues for the year were £23.0m when they were of course £53.0m. We also said that profits were £5.5m when they were £5.6m. All other elements of the piece are unchanged.

Clearwire no longer WiMAX standard bearer

The hitherto WiMax standard-bearer, Clearwire, posted Q2 2010 results showing strong growth in revenue and subscribers, but also continued heavy losses, and an intention to raise even more money to expand coverage. As has been already hinted, the company confirmed its intention to test LTE alongside WiMAX, which probably signals the company’s likely future choice of 4G technology. Clearwire reminds us of 3 in the UK; a (relatively) new entrant to a reasonably established market throwing billions of dollars at spectrum and network build, with breakeven many years away (if ever). Premium subscribers can read our full review of the results in Newswire Plus.

Fixed Line Peer Group Report

We published yesterday our monthly Fixed Line peer group report – a summary follows and Premium subscribers can download the full report here. There were several good share price performances during July in response to results or trading statements, including Virgin (+20.5%), Kcom (+12.1%), BT (+11.1%) and Telecom Plus (+9.1%). By comparison, C&W Worldwide lost 21.9% after warning on a sudden deterioration in public sector spending. The sector continues to trade at a high (30-44%) valuation discount to software companies and at a 25-36% discount to the broader megabuyte universe of c150 companies, at 5.4x EBITDA and 9.7x PE.

A slew of results and trading statements during July highlighted two themes: strong consumer demand for TV products, which helped BSkyB and Virgin, but hindered BT and Talk Talk; and divergent views over public sector spending, with CWW issuing a profits warning but BT and Global Crossing UK seemingly unaffected. The recent spate of private equity deals in the sector continued in July, with LDC backing a management buyout of Easynet from BSkyB for £100m. BSkyB, which bought Easynet for £211m in October 2005, will keep the Easynet network. This deal represents 0.5x current sales (the business is currently unprofitable).