Megabuyte - Technology sector intelligence

We report on the FY09 results of fibre network and rural broadband innovator Vtesse Networks,  the day after the government has delayed the target for minimum 2Mbps broadband availability from 2012 to 2015, due to lack of funding. The financial accounts for 2009 show flat underlying revenues and profitability, though the company experienced a flurry of activity towards year end, pointing to a stronger FY10. As something of a pioneer, Vtesse is pressing ahead with various technical and commercial trials of rural broadband, and could seek to raise substantial funding should the opportunity prove attractive enough. Read more analysis in Newswire Plus.

Sage speculation proved true

As we speculated yesterday, Sage has announced the appointment of insider Guy Berruyer as new CEO. As we noted at the time of the announcement of Paul Walker’s departure back in April (Premium Plus readers see here), whilst Sage has been an undoubted success, it is to a degree living off its past glories, and failing to face up to new industry challenges and opportunities, particularly relating to the move to cloud computing. We would therefore have much preferred to see new blood appointed to the CEO role, rather than an insider.

Google’s cashpile reaches $30.1bn

Google reported its second quarter results overnight, which failed to meet market expectations, despite double digit growth. Q2 2010 revenue was up 24% to $6.8 bn, whilst net income was up 24% to $1.8 bn.  With operating cash flow rising 30% to $2.1bn, the company’s cash pile reached $30.1 bn. The company is continuously on the look-out for investment opportunities, having recently signed a definitive agreement to acquire flight information software company, ITA Software for $700m, following last year’s $700m acquisition of AdMob. On the mobile front, 160,000 Android mobile devices are now being activated daily, up from 60,000 devices last quarter, though the company recently decided to discontinue direct sales of its Nexus One handset. Google’s shares dropped 3.95% to $474.5 in afterhours trading, and the stock has declined 14.8% in the last 6 months.

Indian IT still cautious on Macro economic factors

This week, India’s two largest IT players Infosys and TCS posted their first quarter results, showing strong revenue growth though raising caution about the global recovery. Both companies witnessed significant revenue growth coming from Banking, Financial Services and Insurance (BFSI) and retail verticals. On the other hand, profitability was negatively impacted by a stronger local currency versus the USD and Euro. Management of both companies showed their concern about uncertain macroeconomic environment. Read more in newswire Plus.

Kcom remains committed to growth, sorts out pensions

Kcom’s AGM statement notes that trading to the end of June 2010 was in line with expectations, and the company also reiterated its focus on returning to revenue growth. The market is factoring in a small (1%) return to growth this year, against a 12% decline in FY09/10 and a 4% half on half decline in FY09/10, suggesting most of the action will be in the second half. The company has also clarified its future pensions obligations; the company has received agreement to close its final salary scheme to future accrual, and will pay £21m over the next three years to plug the funding shortfall, with £9m payable this year.