Cable & Wireless saw its shares plunge to levels not seen since the company was first privatized in the 1980s after a disappointing set of results and a poorly-received strategic plan. It plans to focus on only the biggest customers in the US and Europe, and is cutting thousands of jobs in a bid to stem losses.
Investors were disappointed that the company is not pulling out of these markets altogether, and that chief executive Graham Wallace has managed to hold onto his job despite wasting billions of pounds on assets that are no longer viable. We advised selling the shares a month or so ago and reiterate that view.
Corus, another poorly-managed privatization, has shelved its high-risk plans to buy Brazilian steelmaker Companhia Siderurgica Nacional (CSN) for £2.7bn. The news might have lifted the shares – the merger was never popular in the City – were it not for the accompanying warning that second-half trading will not recover in line with expectations amid weakening demand for carbon steel. With debt high and trading poor, these shares are a sell too.
Shareholders have succeeded in blocking chairman Dickson Poon’s first attempt to take Harvey Nichols private. The tax-efficient route that he took – a scheme of arrangement – required him to get 75% of the free-float to back his 250p-a-share offer. Deutsche Asset Management managed to block the deal with the support of 44% of the free float. Mr Poon is now launching a standard bid.
Another nail was hammered into Amey’s coffin this week, when it lost its preferred bidder status on a major private finance initiative contract. The bad news follows Amey’s decision last week not to pay its interim dividend and to ‘review the options for rebuilding the value of the group’. That sounds suspiciously like the company is up for sale.
Yet more bad news for Reuters investors this week as it emerged that the media group had failed to win a major deal to provide workstations to Merrill Lynch, the US investment bank. Reuters claims that it refused to offer a cut-price deal, but the news knocked the shares another 5% to 188p.
Reckitt Benckiser has once again beaten the City’s forecasts with its latest quarterly update. Third-quarter profits increased by 19%, as the company reaped savings from cutting down on its packaging and cheap raw materials prices. The shares have performed well, but are now shockingly expensive.
Somerfield chairman John von Spreckelsen has cleared out another executive at the struggling retailer. Just a month after kicking out his chief executive, he has said goodbye to Kwik Save boss Graham Maguire. Underlying sales growth was 2.2% in the second quarter after a fall of 0.3% in the first.
Does Darwin's theory apply to taxation? Colin ponders...
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
Accountancy watchdog the FRC has dropped its investigation into the former chief financial officer of Tesco, nearly two years after the supermarket was engulfed in an accounting scandal
Colin imagines how Apple's logo might change in the wake of the EC's ruling over its Irish tax arrangements