I don't think there's a fundamental problem here. The interim results were very solid if not quite as good as the market was expecting. I think the Board do need to keep banging out the message that Iomart is not a bog standard data centre company like Telecity. Iomart provides high margin managed services and at the higher end of the business I suspect the customers are still sticky. Maybe the Board should consider selling off Easyspace where customers are not so sticky and where there does not seem to be any growth. I sold about half my holding earlier this year at a very good profit. I've now started buying again. It may take time but I think the market will eventually recognise again the strength of iomart's business strategy.
I am beginning to fear this is turning into another horror story. Big market rise today yet in the absence of news we have another 5% drop in the sp. and the 5 yr charts look really ugly
When is it possible that another company can bid to takeover iomart again? Is it 6months after a previous bid has fallen through?
Build it and they'll come
Doesn't work anymore in selling..... Companies need something clever, some niche, and most importantly a plan on how to sell it.... Public companies need to express this to the market or they take a massive hit! Never more so than in technology, innovate or die (or maybe just get pressured to replace your top people!
Yet Cinven would not extend the same largesse to Iomart’s shareholders and take it on at the mooted 300p-a-share. Cinven was right to be wary. Cloud computing is a buzzword. Businesses from Apple to Nasdaq-listed Rack Space and Aim’s Redcentric are offering public, private or shared networks for storing data. Iomart’s interims last week highlighted how much tougher it is becoming to sign up clients. Mr MacSween is adamant that Iomart “is not vulnerable to pricing [pressures]. Margins are not degrading and won’t in the foreseeable future. They are expanding not contracting”, he says. The company has invested squillions in building data centres and its own fibre network to ensure its systems are efficient and secure. That gives it the edge over rivals, particularly new entrants, says Mr MacSween. But Iomart needs to spend more on selling the message, says one analyst. The web is too competitive, customers are too price conscious and the cloud is evolving all the time. So far Iomart has protected margins, buying rivals to build its customer numbers and creating economies of scale. But that will be tougher if private-equity backed rivals overbid for acquisitions and cut prices to win customers. It may not take much to erode margins of 27 per cent. Fans of Iomart might be wise to follow Cinven’s lead and take their head out of the clouds.
This came out in the FT
Cloudy horizon for Iomart Cinven was right to be wary of buyout as share price falls About the time the Scots were tussling over independence, Glasgow-based cloud computing business Iomart was negotiating with a private equity-backed rival to surrender its autonomy. But while other Aim tech successes Daisy and Advanced Computer Software have been taken private, Host Europe, owned by buyout group Cinven, walked away before formalising an offer for Iomart. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email email@example.com to buy additional rights. http://www.ft.com/cms/s/0/ddaee5dc-8144-11e4-896c-00144feabdc0.html#ixzz3LuWON6vV Iomart, which stores data in the cloud, had been a bit of a market darling. Its shares are up sixfold in three years. But since Cinven ended its brief flirtation in September, Iomart’s shares have fallen a third. Last week they dropped again after the half-year results, when the group said organic growth had been weaker than hoped. Brokers talked of a “shifting competitive landscape”, and the looming presence of Amazon and Microsoft’s public cloud services. Peel Hunt, house broker, cut its earnings forecast for 2015 by 8 per cent. Angus MacSween, who founded Iomart 15 years ago and owns about 17 per cent of the group, says Host Europe never came close to the altar. It had barely started its due diligence before stumbling blocks — price according to some; the management contract, says Mr MacSween — scuppered talks. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email firstname.lastname@example.org to buy additional rights. http://www.ft.com/cms/s/0/ddaee5dc-8144-11e4-896c-00144feabdc0.html#ixzz3LuWRQt00 He says he has no regrets. Iomart is generating cash and earning fat margins — underlying operating profits are about 45 per cent of sales. Pre-tax profits after interest and accounting negatives are 27 per cent. That is high in the sector, according to FinnCap, which says that 90 per cent of Iomart’s revenues are recurring. Nonetheless, there is a hint of wistfulness in Mr MacSween’s voice when he talks about the advantages of his better-funded, private equity-owned rivals. Buyout firms can borrow easily against the repeating and upfront revenues and strong cash generation of data storage businesses such as Iomart. That allows private equity “to stretch the multiples because they have different and much longer-term views on investment returns” than public market investors, says Mr MacSween. That is pushing up the price of the acquisitions that have contributed heavily to Iomart’s growth.
Datafeed and UK data supplied by NBTrader and Digital Look.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk.
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.