Thursday, 30 October 2008

Intec confirms guidance as offer talks abandoned

(By Anthony Miller) Telecom BSS/OSS software vendor, Intec Telecom Systems, has fallen victim to market uncertainties, announcing this morning that approaches to buy the company have come to nought. However, management confirms prior guidance “at the upper end of its expectations” when the company reports FY results (to 30th Sept.) next month. Intec’s FY07 revenues were £125m. Intec’s shares soared nearly 30% to 58p when the deal was mooted back in May, pushing its valuation to around £180m. The stock took a couple of major hits since then and closed last night at 26.5p. As markets open this morning Intec’s shares are already down 9% to 24p.

Intec might be considered a prime example of the ‘Little British Battler’ that conquered the world. In FY07 only 10% of Intec’s revenues came from the UK, though a dramatic 31% decline in North America revenues in the first half due to contract delays and a downturn in managed services revenues undoubtedly changed the mix. Intec has since signed major contracts including in NA. Licence revenues fell to 17% of total sales in 1H08, though recurring revenues remained around 40% as a small increase in support fees offset the managed services decline. The board brought in Andrew Taylor as CEO at the beginning of the year to restructure the business, which was seen as too inward focused and lacking a longer sense of direction.

Successful UK software and IT services players seem to be getting ever thinner on the ground. While shareholders may be disappointed about the lack of a buyer, it would be nice to think that Intec could remain both successful and independent.

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