Newspaper article The Evening Standard (London, England)

Hi-Techs Heartened by Merger of Giants; Market Report

Newspaper article The Evening Standard (London, England)

Hi-Techs Heartened by Merger of Giants; Market Report

Article excerpt


NEWS of the $25 billion ([pound]17 billion) merger of computer giants Hewlett-Packard and Compaq gave a much-needed boost to the struggling hi-tech sector on the London stock market today.

The newly merged company will provide savings of $2.5 billion ([pound]1.7 billion) and it is claimed will give market leader IBM a run for its money. City speculators say it is a good deal and could pave the way for further mergers in the sector. They seem to have ignored the fact that a year ago the individual value of both Hewlett-Packard and Compaq was greater than today's merged business. This merger has been created by the downturn in the personal computers market that leaves companies striving to achieve cost cuts in order to offset falling sales.

But that was all pushed to one side today as hitech fans grabbed the baton and chose to run with it. Colt Telecom extended yesterday's gains with a rise of 10 1/2p to 199p.

It is likely to face the drop from the top 100 companies next week when the Footsie steering committee meets for its quarterly review. Its price has collapsed from a peak of 2280p last year with the company now only valued at [pound]1.5 billion, although it still boasts cash of [pound]1.3 billion. Some investors would argue it looks vulnerable to takeover.

Other former high-flyers trying to make up lost ground included ARM Holdings, up 9 3/4p at 278 1/4p, Energis 2 3/4p to 76 1/4p, Misys 14 1/2p to 321 1/2p and Spirent 5 1/2p to 129 1/2p.

Marconi responded to news of the boardroom bloodletting, first-half trading losses and huge write-offs with a rise of 1 1/2p to 55 1/2p as a hefty 50 million shares were traded. It came after the group concluded a major review of its business which underlined the City's worst fears. But brokers argue that Marconi has come clean after throwing in everything, including the kitchen sink, and they can begin to put a value on the shares which have collapsed from a peak of 1250p last year. …

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