The torpedoing of the Barclays’ deal means raising morale may now be equated with
Posted in General on 04. Oct, 2010
The torpedoing of the Barclays’ deal means raising morale may now be equated with the raising of the Titanic.So who now will take over the ailing papers? The smart money says that the Barclays will regroup and come up with another bid that will win the day. “We have quite a timid business model here,” said Ms Scardino, referring to the growth expectations for the home-selling business.The FT loss of £32m, up from a £23m loss the previous year, came after a 18 per cent fall in advertising revenues in the first half of 2003 Ad sales were 12 per cent lower in the second half. January and February this year saw a 4 per cent drop.In the middle of last year, Pearson had indicated that the FT would break-even in 2004 if revenues were flat for the rest of 2003 That did not happen. Yesterday, the company said that the cost-cutting drive at the newspaper would reduce losses by £20m, even with no advertising recovery.Ms Scardino said she was not assuming that there would be any advertising rebound. “We can’t tell what’s going to happen,” she said.City analysts expected ad sales at the FT to move into positive territory later this year, though that would still probably mean a loss for the year.
CSFB, the broker, said it expected a £6m loss at the FT in 2004.Asked if she stood by her comment that she would sell the FT “over my dead body”, Ms Scardino said “absolutely” “We’d be nuts [to sell]. It’s a fantastic brand.”Pearson told the City to expect growth in its most important business – educational publishing – next year and in 2006. The company indicated that some areas of the education business, which is US-based, would see “double-digit” growth from next year, as the “adoption cycle” picks up – the system whereby individual US states pick new school text books.. It has been three years since Persimmon gobbled up Beazer and the success of that acquisition – which doubled the company’s size – shone through in the full-year results yesterday. Gearing has come down to some 26 per cent and the company is able to pull off another decent sized acquisition, he says.Given the success of acquisitions in the sector, we can expect consolidation to continue. There are plenty of juicy targets, such as Westberry, Bellway, Wilson Bowden and Redrow.Persimmon has demonstrated there are economies of scale available in the buying of supplies and working large chunks of land, which often require significant capital investment to develop.But the basic reason for acquisitions up to now has been for sector leaders to take over poorly performing businesses and turn them around.Persimmon reported a record profit of £352.5m, before tax and goodwill, for the year ended 31 December 2003 – ahead of expectations. The operating margins jumped to 20.3 per cent, from 17.5 per cent in 2002.
As a sign of its confidence, the company boosted the full-year dividend by 21 per cent to 18.3p. Even without acquisitions, the company has plenty of room to grow organically.The state of the housing market does not seem to worry any of the housebuilders, with Persimmon pointing to a healthy slowdown in price inflation this year.Its shares closed at 597p yesterday, putting the stock on a forward multiple of just 6. Buy.Recovery looks to be priced into IsisIsis Asset Management has become known for its bolshie stance on corporate governance, but what of its own performance?With stock markets rebounding, things have looked better of late. Despite a pre-tax loss of £8.7m for the year, its second-half losses had narrowed. Isis is upbeat about market prospects and has done well in building a brand through two very tough years.Isis was formed out of Ivory & Sime and the fund management arm of Friends Provident.
It is still 67 per cent owned by Friends, but with the takeover of the investment arm of Royal & SunAlliance in 2002, it doubled its funds under management to about £60bn.Some 65 per cent of its revenues comes from managing the multibillion pound portfolios of Friends and RSA. Isis, however, has big ambitions beyond its insurance contracts and is aiming to be a top five player by 2009. It is now in the number 10 slot, and is keen to get there through other acquisitions. Outsourcing its back office last year was a shrewd cost-cutting move and gives it a good platform going forward.At 244p, however, it is trading at about 16 times forward earnings The stock market recovery seems to have been priced in.