Image may be NSFW.
Clik here to view.
That sinking (or should it be shrinking?) feeling.
As you can see from the Share Indices table, May was a pretty depressing month all round with FTSE100 down 7.3% and giving up all its gains – and some – for the year. The reasons are on the news headlines every night so I won’t repeat them here. NASDAQ was down 7.2%. Many blame Facebook - now down over 20% since its IPO. If you are not bored with this already, reread our comments starting here - $25b wiped off Facebook value since IPO - and work back.
UK tech fared a little better. Indeed, the FTSE SCS Index which most closely reflects the UK quoted SITS companies that we follow, declined just 0.9%. But there was one overriding reason for this – M&A.
Logica is one of the largest constituents of this weighted index. Logica is up 42% on that CGI bid yesterday. Our views on this and the performance of Andy Green are well documented both in HotViews (See Logica to be acquired by CGI) and just about every quality broadsheet in the UK today. Surprisingly, CGI shares were up 8% this month. We will monitor this carefully. We have no recorded example of a company acquiring a larger company than themselves and this being good for shareholders. Kewill is another FTSE SCS constituent. They rose 25% this month on being taken private at a premium, by Francisco Partners – See Kewill leaves it heart in Francisco.
So yet another two tech companies join the ‘Dearly Departed’ List. The FT today headlined UK tech gets that shrinking feeling. The FTSE tech index now has just 29 constituents today compared to 36 in 2007 and 57 in 2000. And, as I was reported as saying in the FT today, the problem is that there are no new significant entrants. The last was EMIS in 2010 and TeleCity in 2007. Anyone (like the Logica Chairman today) who thinks that not having strong UK HQed companies doesn’t matter, is deluded. Andy Green, via his involvement in eSkills, must know of the huge dichotomy between the UK hiring activities of UK HQed companies compared to most of the others.
At the other end of the scale (ie UK quoted companies which have not as yet received takeover bids) Sopheon got the wooden spoon with a 39% fall. Bit surprising as we thought that Sopheon had got off to a good start to its financial year. SThree fell 23%. Not a good reaction to Russell Clement’s decision to stand down.
Outside the UK, perhaps nobody will be surprised to learn that the top three ‘fallers’ in the list were Nokia (down another 27%), Dell (down 25%) and Facebook (down 22%). If you really are surprised, then clearly you need to pay more attention to HotViews or, perhaps, become a paid for subscriber!
