Yesterday, NASDAQ topped 3000 for the first time since 2001. That’s a rise of 13.9% in just the first two months of 2012 alone. Apple dominates the NASDAQ and, as we reported yesterday, see Golden Apple, their share price has soared by 34% in 2012.
In the UK, against a backdrop of a 5.4% rise in the FTSE100, our own UK FTSE SCS Index was up a similarly impressive 12.3% in 2012 YTD with a 5.9% rise in Feb alone. Hexaware – up a massive 51% - was one of the best performers. See Transformed Hexaware doing the business.
Outside the UK worth noting that, despite losses topping $4b in just 3 quarters, CSC advanced 23% in Feb. This was, of course, pretty much totally as a result of the appointment of Mike Lawrie (hot foot from Misys) as CEO. Capgemini was up 18.5% too. But this was more to do with performance outside of the UK. See Capgemini UK margins squeezed. Despite reporting a loss (and forecasting a loss for this year too) Salesforce.com advanced 23%. See Salesforce.com trumpets social growth but swings to a loss.
Given that the vast majority of SCS stocks advanced in the month, the declines at Unisys (down 11%) – see Unisys returns to falling revenues - and HP (down 10%) – see HP Q1 feeling the pressure - must be particularly concerning. It's going to take a long time to turn these old models around to face the rapidly changing challenges of the market today.
The UK FTSE Support Services Index was the best performing of all – up 13.6% in 2012 YTD. This was helped by the performance of the biggest stock in the Index – Capita up 25% in 2012 YTD. See Capita ‘ups and downs’ in 2011. On Tuesday we visited Capita – Mark Wyllie and Mark Quatermaine – see Capita’s big ambitions in IT Services. Capita is now one of only two holders of the Holway Boring Award which you only get for 10 years of uninterrupted earnings growth. Capita’s record actually stretches back to at least 1989 when they IPOed. I admit to being a long-term Capita shareholder where, up until 2007, they were the best performer in my portfolio (that crown has since been taken by Apple) Since then Capita’s share price has plateaued for 5 years before its recent spurt. Serco, another big constituent of this index, also advanced 9%. See Serco achieves single digit organic growth.
But others in the Support Services Index did well too. Indeed Mouchel continued its recovery – up 72% in Feb due to the appointment of turnaround specialist David Shearer a couple of months back. Xchanging also advanced by 24% on news of a Procurement deal with BAe but also, no doubt, a follow on from the appointment of their own ‘turnaround specialists’ – Geoff Unwin and Bill Thomas – at the end of last year.
Micheal Page (up 17%) Robert Walters (up 16%) and Harvey Nash (up 9%) are also part of the Support Services index. Although their good share price performances were much more to do with their non-UK operations.
So what of the future? The feeling ‘this is all a bit too good to last’ is creeping in right now. The good news on all fronts has outweighed the bad for the first time in years. Are we finally out of the crisis period? Are we now in a period of accelerating recovery? Or are we in for another major Eurozone shock? I’ll leave that to wiser heads than me to decide whether to bank the gains or wait for even more!