Megabuyte - Technology sector intelligence

Whilst the megabuyte team was taking a 2 week break, albeit in unseasonal August weather, a number of companies were also suffering grey clouds. Infrastructure software leader Micro Focus reported flat organic revenues for the first quarter, due to delayed timing of significant transactions and weakness in existing high volume business (Premium Plus readers see here). Mobile billing systems provider Intec also sees continued difficult market conditions and, to cap off a bad year, now faces the loss of a customer that could hit FY10 profits by a third (see here). Also seeing slow demand from mobile operators is telecoms consultancy and systems integrator Norcon, who expect first half revenues 5% below management expectations due to delays in new contracts (see here).

On a brighter note, Inmarsat will receive an initial $337.8m over 18 months from new US 4G mobile entrant LightSquared to re-band North Amercian satellite spectrum, with the prospect of ongoing annual fees of $188m. Coincidentally, LightSquared is owned by Harbinger Capital Partners, which also owns 28% of Inmarsat (see here).  In the healthcare IT space, GP software provider EMIS made a small but sensible bolt on acquisition of Rx Systems for £9.95m (see here).

Whilst it has been relatively quiet over here, it has been quite a busy time for results over in the US. Premium subscribers can read our coverage of results from Intuit, Salesforce and HP in the Sector Commentary section of Megabuyte here. Perhaps the most interesting piece of news to come out of the US last week was Intel’s $7.7bn bid for McAfee. The deal has certainly taken the market by surprise but we see significant merit in it; we’ll have more analysis on the ramification of the deal later today.

1^st The Exchange – a phoenix from the ashes

We initiate coverage this morning on 1st The Exchange which provides a range of portal solutions to the financial services sector including online comparative quotations, electronic new business applications and trading platforms. In addition to this, the company specialises in providing technology solutions for various business processes such as call centre and CRM and other outsourcing services to the financial services industry.

1^st The Exchange was formed by the combination of 1st Software Group and The Exchange. Vertex Group acquired The Exchange’s parent Marlborough Stirling, a software and services provider, for £95.3m in May 2005 and back-office software provider, 1st Software Group for £25m plus an earn-out of up to £13.5m, in February 2006. In August 2009, despite economic slowdown, the company completed a funding round from Lloyds TSB Development Capital (LDC). As a part of this £115m deal LDC acquired a controlling stake in 1st The Exchange for £42m, while Vertex Group retained a significant holding in the company. Megabuyte Premium subscribers can read our full initiation note on here.