July 26th 2010

Cambridge Index rises 2.0%

Encouraging earning reports from companies and rising confidence that most of the 91 Eurozone banks would pass the stress tests spurred broad gains across the global equity markets over the week.
The Cambridge Index rose 2.0% or 149.4 points to 7,626.5, as seven of the top eight index heavyweights recorded healthy gains. ARM Holdings rallied 16.2%, after Royal Bank of Scotland (RBS) upgraded the stock to “Buy” from “Hold” and assigned a 420p target price on the stock, citing the company’s new licensing deal for the ARM(R) architecture with Microsoft Corp. Johnson Matthey gained 5.0%, after the company announced that it has made a good start to the financial year. CSR rose 4.5% to 407.0p, after announcing the launch of its first single-mode, single-chip Bluetooth low energy platform, CSR uEnergy.
Sareum Holdings jumped 27.3% and emerged as the top gainer in the Cambridge Index. Sagentia Group rallied 14.3%, after swinging to a profit. First half revenue dropped to £9.8 million from £12.1 million and profit before tax stood at £0.9 million, compared to a loss of £1.9 million recorded in the same period a year ago. Other noticeable gainers included Bango, Cyan Holdings and Abcam, all up between 11.9% and 23.4%. Brady added 3.1%, after the company announced that the group has achieved growth in revenues of approximately 20% for the first six months of 2010, compared to the same period in 2009. Scientific Digital Imaging edged up 2.3%, after its full year revenues increased 6.4% to £7.2 million and profit before tax jumped to £0.3 million.
ANT plunged 18.5% and emerged as the top loser in the Cambridge Index. Autonomy tumbled 14.4%, as its second-quarter earnings slightly missed market expectations. The stock was additionally pressurised by disappointing second quarter earnings from its US technology peers, IBM and Texas Instruments. Second quarter revenues climbed 13.3% to $221.1 million and pre-tax profit slipped 5.9% to $67.5 million. Xaar lost 3.7%, despite announcing that trading for the first half was in line with the board’s expectations and revenues were ahead of the same period last year. Other prominent losers were Tristel, LPA Group and Hartest Holdings, all down between 2.2% and 3.7%. Sepura slid 2.2%, after the company predicted its first half to be slow. Shares of Vernalis and Amino Technologies shed 3.1% and 1.2% respectively, ahead of the release of their first half results.
In the UK, the FTSE 100 Index gained 3.0% to 5,312.6, as investor sentiment was boosted by positive corporate earnings from the US and a spurt in merger & acquisition activity. Commodity stocks received a boost from higher metal and oil prices during the week, while banks were in demand, amid hopes of a positive outcome from the stress test results from the Eurozone banks. UK retail sales registered a higher-than-expected gain in June, easing concerns over the weakening of economic recovery. The FTSE techMARK 100 Index rose 0.4% to 1,853.1, while the FTSE AIM 100 Index added 1.5% to 3,131.6.
US markets rose during the week, helped by robust earnings reports posted by US corporates and after most of the European banks passed the stress tests. Caterpillar and 3M led industrials higher, after reporting higher quarterly sales and raising their outlooks. Adding to the positive sentiment, US house building permits climbed 2.1% to an annual rate of 586,000 in June. The Dow Jones Index rose 3.2% to 10,424.6, and the Nasdaq Index rallied 4.1% to 2,269.5.

Index Movers

ANT PLC

ANT PLC, a provider of embedded application software and support services, plunged 18.5% to 22.0p, emerging as the top loser in the Cambridge Index.

ARM Holdings PLC

Shares of chip maker, ARM Holdings PLC, rallied 16.2% to 353.3p, after Royal Bank of Scotland (RBS) upgraded the stock to “Buy” from “Hold” and assigned a 420p target price on the stock, citing the company’s new licensing deal for the ARM(R) architecture along with Microsoft Corp. The agreement extends the collaborative relationship between the two companies. The financial details were not disclosed.
Separately, the company announced that it has signed a long-term strategic agreement with Taiwan Semiconductor Manufacturing Co (TSMC) to achieve optimised Systems-On-Chip (SoCs) that would provide TSMC with access to a broad range of ARM processors. In particular, ARM, in collaboration with TSMC plans to develop technology that would create a first 28 nm processors, and then completely move production to 20 nm technology standards.
This would strengthen TSMC’s dominant position in the foundry market by securing ARM Holdings’ patents for its customers such as Nvidia Corp. and Qualcomm Inc. The financial terms were not disclosed.

Autonomy Corp. PLC

Autonomy Corp. PLC, an infrastructure software company tumbled 14.4% to 1623.0p, as its second-quarter earnings slightly missed market expectations, and after the company posted disappointing second quarter operating margins. The stock also fell, as its US technology peers, IBM and Texas Instruments posted disappointing second quarter earnings.
The company, in its second quarter results ended 30 June 2010, announced that revenues climbed 13.3% to $221.1 million from $195.2 million and pre-tax profit slipped 5.9% to $67.5 million from $71.7 million recorded in the same quarter in the previous year.
Operating margins fell to 43.6% in the second quarter, compared to 47.2% in the second quarter of 2009.
First half revenues rose 28% to $415.3 million from $325.0 million and profit before tax widened to $136.3 million from $121.7 million.
Chief Executive Officer, Dr Mike Lynch said, “We expect to see the usual seasonality and unpredictability of the split of revenues between Q3 and Q4. Overall we face the rest of the year with a strong balance sheet, and in light of the continuing macro recovery, we are confident in our ability to continue to deliver strong growth for the full year.”
Separately, the company announced that it has received a multi-million dollar order for its compliance solutions from a major global bank based out of the US. The agreement has an expected value of in excess of $15 million over the next few years.

Bango PLC

Bango PLC, a developer and provider of technology for mobile phones, climbed 19.6% to 116.0p.

Cyan Holdings PLC

Cyan Holdings PLC, a fabless semiconductor company providing configurable application software, surged 23.4% to 1.0p.

LPA Group PLC

LPA Group PLC, a provider of electronic and electro mechanical systems, closed 3.1% lower, at 31.0p.

Sagentia Group PLC

Sagentia Group PLC, an international technology consulting and IP licensing firm, rose 14.3% to 52.0p, after swinging to a profit. The company, in its interim results for the six months ended 30 June 2010, announced that revenue dropped to £9.8 million from £12.1 million and profit before tax stood at £0.9 million, compared to a loss of £1.9 million recorded in the same period a year ago.
Cash balance stood at £12.5 million including proceeds of the placing in May 2010 and net funds at £6.6 million (H1 2009: Net debt of £4.8 million).
The board has decided not to pay any dividend.
On the outlook front, the company commented that it remained cautious, particularly with a number of large projects coming to completion in the coming months and the number of billable days in the second half reducing due to the summer and Christmas vacation periods. However, it added that recent new project wins and a good pipeline provide Sagentia with the opportunity to continue the progress made in the first half of the year.

Sareum Holdings PLC

Sareum Holdings PLC, which is engaged in structure-based drug discovery business, jumped 27.3% to 0.3p, and emerged as the top gainer in the Cambridge Index.

Tristel PLC

Tristel PLC, a provider of infection control and water treatment products, declined 3.7% to 51.5p.

Xaar PLC

Xaar PLC, a provider of inkjet printing technology, lost 3.7% to 129.5p, despite announcing that trading for the first half was in line with the board’s expectations and revenues were ahead of the same period last year.
The company stated that sales of its Platform 1 (P1) products have remained relatively stable, and demand for Platform 3 (P3) products has continued to increase significantly, adding that it had witnessed a marked improvement in Q2 over Q1.
Net cash and cash equivalents as at 30 June 2010 were approximately £8.2 million (31 December 2009: £11.1 million, 30 June 2009: £10.3 million) after approximately £2.8 million of capital expenditure and £0.9 million of dividends paid in the period.
The board intends to pay interim dividend, details of which would be provided at the time of the announcement of the interim results.

Other Movers in the Index

Amino Technologies PLC, a broadband network software and systems company, eased 1.2% to 41.0p, ahead of its interim results for the six months ended 31 May 2010, scheduled to be released on 27 July 2010. Separately, the company announced that it has appointed finnCap Limited as its Nominated Adviser and Broker with immediate effect.

Brady PLC, a provider of transaction and risk management solutions for metals and commodities, added 3.1% to 67.0p, after the company, in its trading update for the half year to 30 June 2010, announced that the group has achieved growth in revenues of approximately 20% for the first six months of 2010, compared to the same period in 2009, and the group’s trading continues to be in line with the board’s expectations for the full year. Chief Executive Officer, Gavin Lavelle said, “We have started the second half of the year with confidence.”

CSR PLC, engaged in designing single-chip wireless devices, rose 4.5% to 407.0p, after the company announced the launch of its first single-mode, single-chip Bluetooth low energy platform, CSR uEnergy, addressing the needs of ultra low power connected devices.

Pub operator, Greene King PLC, closed 0.2% higher, at 445.4p.The company announced that Chief Executive, Rooney Anand, has exercised the option of 112,127 shares. 52,326 share options were exercised at 296p and 59,801 at 332p.

Johnson Matthey PLC, a speciality chemicals company and leading provider of precious metal products and environmental technologies, gained 5.0% to 1695.0p, after the company announced that it has made a good start to the financial year, with the first quarter sales excluding precious metals 32% ahead of the same period last year and slightly up on those in the fourth quarter of fiscal 2010. In the three months to June 30, underlying profit before tax was 47% ahead of the first quarter of last year and in line with that in the previous three months. The group’s financial position remains strong.
It expects the second quarter to be significantly stronger than the same period last year. However, it expects that 2Q results would be lower than those in the first quarter due to normal seasonal factors. It mentioned that the outlook for the second half of the year still remains harder to predict, but added that if demand remains at current levels, full year results would be well ahead of last year.

Netcall PLC, a provider of call-back, auto-messaging and contact solutions, increased 2.2% to 11.5p. The company announced that that the court has sanctioned the scheme of arrangement in connection with its recommended offer for Telephonetics.

Scientific Digital Imaging, a digital imaging technology company, edged up 2.3% to 22.0p, after the company, in its final results for the year ended 30 April 2010, announced that revenues increased 6.4% to £7.2 million from £6.8 million and profit before tax widened to £0.3 million from £0.1 million recorded in the previous year.
The company stated that any cuts to science budgets in the UK could weigh on its future earnings and added that it plans to acquire other imaging companies in the life sciences sector.
Separately, the company announced that Non-Executive Director, Eric Kenelm Ford purchased 75,000 ordinary shares at a price of 27p per share. Following the acquisition, Eric Kenelm Ford is interested in 75,000 shares, representing 0.42% of the company’s issued ordinary share capital.

Sepura PLC, a supplier of network-independent Terrestrial Trunked Radio terminals and digital radios, slid 2.2% to 43.8p, after the company predicted its first half to be slow, following delays due to reappraisal of capital budgets in the UK and Southern Europe. However, the company expects its second half to be strong and volumes for the full year to be on target, buoyed by its strong position in Germany.
As a result, the company added that its Board’s expectations of increased volumes and revenue this year remain as previously advised, weighted towards the second half and subject to the inherent lumpiness in the TETRA market. Separately the company announced that Chairman, Philip Nolan, would step down from the board with immediate effect and would be replaced by John Hughes.

Shares of biotech firm, Vernalis, shed 3.1% to 31.5p, ahead of its interim results for the six months ended 30 June 2010, scheduled to be released on 29 July 2010.