Thursday tips round-up: SDL, Darty, Softbank

20th Jun 2013 06:37

SDL and Micro Focus International share an odd similarity in that both software companies need to be nursed back to health by former chairmen, The Times' Tempus column reported. However, they are quite different businesses in that SDL writes its own innovative software, while Micro Focus allows customers to manage existing systems, such as those written in the computer language Cobol. SDL has released yet another profit warning this week while Micro Focus was the dog of the sector a couple of years ago, turned down for a purchase by four private equity houses. "The share price performance suggests that those bidders missed a bargain," the column said of Micro Focus. While the company is never going to be a high flier the shares represent a solid and fairly safe long-term investment, Tempus added, as revenue is expected to sustain about 5.0% per year. Darty cannot help but improve after reporting a loss in the face of a tough French market for white goods and TVs, Tempus said. Despite being a leader in the French electricals market, the company's profits in the country fell by 30% in the year to the end of April. "The company is now out of the truly disastrous Italian and Spanish markets, with a little bit of tidying up to do in the latter, but this left a deal of red ink in the results from one-off costs, both this year and last," The Times column reported. Darty, however, is expected to pick-up as it exits from loss-making markets and those cost savings kick in. "But, given the state of those markets, it is not easy to see a reason for further outperformance. Hold for the yield." SoftBank looks set to takeover Sprint following a sweetened bid for the wireless network group, according to the Financial Times' Lex column. Rival suitor Dish Network has declined to counteroffer at the moment but SoftBank's victory does not derive from superior economics alone. "SoftBank negotiated aggressive deal protection terms that built a wall around its bid - and paid Sprint shareholders only 7.0% more for the privilege," the column said. SoftBank raised the portion of its offer that goes to Sprint shareholders and in exchange received a higher break-up fee and a "poison pill" preventing anyone else from buying a big Sprint stake. "An incrementally superior bid, first-mover advantage and some tough deal protections have sealed the deal for SoftBank. Investors are left to wonder what might have been."RDPlease note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.