THERE is no pleasing some folk.
Just a day after BT Group released details of a 1.6 billion 10- year contract to act as a local service provider for the NHS’s IT programme, comes news of a downgrading for the group by one of the City big players.
Goldman Sachs has cut BT from inline to underperform and warns the stock, up 11/4p at 173p, is likely to remain out of favour for some time. It blames “sustained pressure on voice revenues, fierce internet broadband competition and lack of exposure” to the mobile phone market. In addition, revenues from BT’s fixed-line business will come under pressure from the mobile phone market, and carrier pre-select will be grabbing increased market share.
Goldman estimates that broadband will provide around 40% of “new wave” revenue growth during the next three years but will be affected by the launch of fixed wireless access services next year. BT has pledged to spend 40 million buying back its own shares which Goldman says is too little to make a significant difference.
Spurred on by the 103-point rise in the Dow overnight, share prices in London were marked higher. The rise on Wall Street was achieved despite the latest drop by the dollar, to its lowest level against the pound for 11 years and in the face of a growing trade deficit. The FTSE 100 index rose 26.3 points to 4386.1. Turnover remained low ahead of tonight’s US Federal Reserve meeting on interest rates and tomorrow’s Pre-Budget Report. Financials were to the fore with Prudential, up 73/4p at 462p, Amvescap 6p to 37p, and Provident Financial 121/2p to 6141/2p.
Cable Wireless led the top 100 higher with a rise of 41/2p to 1383/4p on further reflection of its withdrawal from the US. The final estimated cost of 300 million was way below the 1 billion calculated by some brokers.
Satellite broadcaster BSkyB rose 3p to 6671/2p after credit rating agency Standard Poor’s lifted it out of junk status.
Dealers say this could be the first step towards restoring the dividend.
Hedge fund operator Man Group marked time at 1466p despite broker- UBS starting coverage with a buy rating and 1800p price target.
Fund manager Savoy Asset Management, where former Chancellor Kenneth Clarke is chairman, advanced 21/2p to 1321/2p as brokers pondered yesterday’s interims revealing reduced losses.
Ten fund managers hired from SG Securities brought funds of 425 million, swelling SAM’s coffers to 1.1 billion under management.
The group is on target for a profit of 200,000 for the year.
Engineer Halma may have finally won over some of the sceptics by unveiling interim profits of 24.4 million, up 15% and at the top end of analysts’ expectations. The group, which makes health and safety kit, firmed 2p to 137p, almost 40% above its 961/2p low for the year in March.
Britain’s housing boom swelled the balance sheet of Grainger Trust, down 14p at 1610p, one of Britain’s largest residential property managers. Its net asset value per share jumped 27% to 2194p for the year to September.
Property trading drove Grainger’s pre-tax preexceptional profits up 8% to 48.5 million. Around three quarters of its homes are occupied by the elderly on regulated low-rent tenancies. Grainger has calculated its underlying break-up value is 1840p a share, 28% more than last year.
