Monday, 28 January 2008

Mark Hunter and Axon

When I made my posting Axon shares halved on 11th Jan 08, I said I was having lunch with Mark Hunter later in the month. This happened today.

It would be inappropriate for me to go through our long and highly enjoyable session together. But I just wanted to reiterate that I probed Mark quite extensively about whether he knew of any other reason (other than the general tech market downturn and his own departure) for Axon's steep share price fall.

I am entirely satisfied that there is none. Indeed, I fully expect (as Axon has said publicly) that they will make - maybe even exceed - analyst expectations. I'd also say that I think that Axon is as well placed as any - and a lot better than most- to weather the current storms. They have a diversified customer list encompassing public sector, utilities, aerospace, defence and financial service with no particular heavy exposure to any. Their big contract with Barclays is in factoring - which tends to do well in a financial downturn! The US business is well balanced and resilient.

Anyone who knows Mark will realise that he was a great founder/leader. But he seems to have had the sense to realise that the talents required to grow from nothing to £200m are quite different talents to those required to grow from £200m onwards. As Mark points out, he has visited the US operations just three times in the last couple of years; letting new CEO Steve Cardell run the show.

So should Mark have stayed on as an NED?

Ex CEOs as NEDs are really bad news anyway. But, I hope Mark won't be offended, I don't think he'd make a good NED at any SITS company. I know from my own experience how frustrating being an NED can be. Mark doesn't even have my patience!

The real question therefore is "Is Axon now undervalued?" or "Was Axon just overvalued all the way along?". I guess I'll leave that one to my broker friends/readers but readers also know that I sold my own Axon shares last November at c800p.

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