Market Report: London Bridge Software seen as shaky bet in tech slowdown

IF MARKET gossips are to be believed, London Bridge Softwareshares will soon be falling down with a profits warning from thecompany. Talk has it that the company, which has issued one warningalready this year, is struggling to meet its current-year forecasts.City analysts who usually pour cold water on such rumours seemed toagree that market estimates of about pounds 13 million of pre-taxprofits for the current year were beyond its reach.

The major problem for London Bridge is that more than half of itssales are to the US, where the slowdown in technology spending hasbeen severe. Some analysts now forecast contract delays anddeferrals. A further problem for London Bridge is believed to bePhoenix International, a US-based software company that it acquiredat the end of last year for $45.5m (pounds 32.5m). Phoenix, whichalso operates in Europe, Latin America and the Asia Pacific, wasracking up losses at the time of the takeover and - worryingly forLondon Bridge - that has continued.

Back in January, London Bridge warned that its sales would bebelow expectations because of the delay of four large licence orders.Then a couple of weeks later the group barely managed to meet themarket's reduced expectations. Yesterday, the stock was 1.5p betterat 185p.

The FTSE 100 index finished 8.8 points better at 5,680.4, withtechnology stocks leading the rise thanks to modest gains on theNasdaq Composite at the start of its session. The techMark 100 was2.86 points stronger at 1,836.02, while the FTSE 250 was 18.4 pointshigher at 6,409,9.

BSkyB was 18p higher at 705p as JP Morgan upgraded itsrecommendation to "buy" from "market perform", with an 800p pricetarget. Analysts at the brokerage were heard to be telling clients tobuy below 700p and to sell above 800p. Apparently they believe thatBSkyB will be less affected by the slowdown of advertising revenuesthan some of its peers.

Marconi was a faller for the tenth straight session, giving up 2pto 266p. The stock was hit again yesterday by continuing brokerdowngrades.

In the FTSE 250, house builders were in fashion, with Wimpeyadding 15.25p to 176.75, Wilson Connolly firming 10.5p to 172.5,Barratt Developments rising 12p to 325.5p and Taylor Woodrowadvancing 11.5p to 193p.

Persimmon, 18.5p better at 310.5p, was given an extra push byMerrill Lynch, which reiterated its "buy" rating and set a 350p pricetarget. The broker reckoned that the recent weakness of the housebuilding sector, fuelled by fears of rising UK interest rates, hasbeen overdone and that the current weakness represented a buyingopportunity.

Specialist publisher and conference organiser Informa fell 47.5pto 425p after ABN Amro and UBS Warburg made cautious sounds on thecompany. ABN slashed its estimates for the current year and followingyear after a meeting with management and is believed to be concernedabout Informa's exposure to the troubled TMT sector. UBS alsodowngraded its estimates and reduced its target price to 600p from700p.

Riversoft, the internet protocol networks group, was 3p lower at51.5p, as Apax Partners sold 3.5 million shares or 1.4 per cent ofthe company. Director Eric Meyer also sold down his stake, disposingof 39,000 shares at 60p. The lock- up period for early-stageinvestors expired last Tuesday. Dealers are said they would not besurprised to see further sales from venture capitalists anddirectors.

Navan Mining gave up 5p to 119.5p after warning of weaker resultsthan expected for the first quarter. The Irish miner, which recentlystruck gold in Bulgaria, said an increase in production was beingeroded by lower metal prices.

The Alternative Investment Market, London's junior exchange,celebrated its sixth birthday yesterday. However, the FTSE AIM Indexfell 6.2 points to 1,197. The index's second-biggest stock,InTechnology, was partly to blame, giving up 34p to 320p. Investorswere disappointed that the company did not announce details of a moveto the FTSE 250 main market along with its full-year results.

Pawnbroker Albemarle & Bond hit a year high, adding 1p to 44pafter director David Page bought 11,500 shares at 43.75p. Marketwatchers saw the stock as a possible strong performer as economiesslow and more people are tempted to sell the family silver.

Dockyard operator Babcock International lost 14p to 90p afterfalling into the red. Losses stood at pounds 7.3m, from a profit ofpounds 26m last year. The company blamed the costs of its plannedtransformation into a support services operation focusing on civiland defence-based work.

IT IS time to take profits in Michael Page International ahead ofits trading update, according to Commerzbank Securities. The brokerbelieves the recruitment consultancy will not meet forecasts,particularly after its peer Hays confirmed slowing business. Thecompany, which floated earlier in the year, is trading at 19 per centabove its 175p IPO price. The German broker downgraded itsrecommendation yesterday to "hold", pushing the stock down 2p at210p.

MARKET MOVERS

Kingfisher 392.75p (up 18.75p, 5.0 per cent). Rally after creditrating worries.

Dimension Data 295.5p (up 13.5p, 4.8 per cent). Goldman Sachsreiterates "market outperform" rating.

Logica 852p (up 27p, 3.3 per cent). Cazenove makes positive soundswith stock aided by Nasdaq rally.

Time Products 190.5p (up 5p, 2.7 per cent). MBO bid agreed byindependent directors at 190p per share.

Halma 158p (up 13p, 9 per cent). Investors warm to better full-year numbers than expected.

Railtrack 334.75p (up 11.75p, 3.6 per cent). BNP Paribas upgradesto "outperform" from "neutral", with 500p price target.

DBS Management 145p (up 72p, 99 per cent). Receives pounds 75m bidfrom Misys.

Chorion 32p (up 0.5p, 1.5 per cent). Company buys three newnightclubs in London for pounds 7.5m.

Torex 712.5p (up 27.5p, 4 per cent). Announces strong currenttrading, and Mark Pearman named new CEO.

KS Biomedix 341p (down 6.5p, 1.5 per cent). Unveils pounds 42macquisition of Canadian biotech Avicenna.

Colt Telecom 550p (down 38.5p, 6.5 per cent). Brokers warn ofcontinued short- term weakness in stock.

Baltimore 40.75p (down 4.25p, 9.4 per cent). Funding worriespersist.

Morgan Crucible 297.5p (down 14.5p, 4.7 per cent). Deutsche Bankdowngrade to "underperform" from "market perform".

Alba 297.5p (down 105p, 26.1 per cent). Results hit by spending oninternet TV product.

Domino Printing 115p (down 11p, 10.1 per cent). Second half to behit by weakness in US operations.

Atlantic Telecom 14.5p (down 1.75p, 10.8 per cent). Fundingworries ahead of results.

Computacenter 330p (down 20p, 5.7 per cent). Weak second-quartersales hit sentiment.

BATM 80p (down 2p, 2.4 per cent). Telecoms vendors still sufferfrom Nortel.

SEAQ TRADES: 117,583

SEAQ VOLUMES: 1.77bn