Computacenter dips despite profits boost

Shares in IT firm Computacenter fell 5% today after talks that could have led to a takeover by its co-founders came to an end.

Computacenter said talks over an approach led by Sir Peter Ogden and Philip Hume – rumoured to value the company at £485m (€706m) – had not progressed to an offer and had been terminated.

The group also revealed in a trading update that profits for the year to December 31 were expected to be materially ahead of market expectations.

The Hatfield, Hertfordshire-based company, which provides equipment and IT services to companies and government departments, said pre-tax profits should be in the range of £32m (€46.6m) to £34m (€49.5m) due to “unusually strong demand” at the end of the year.

Computacenter was boosted by demand among businesses for its products and software, rather than for personal computers, helping it recover from slow trading in the third quarter of 2005.

UK service revenues were broadly the same as last year, while trading in Germany was “encouraging” in both the third and fourth quarters. Computacenter also said its French business improved substantially in the second half, meaning annual revenues at the arm would be broadly flat on 2004.

Although shares fell 13p to 242p today, this was still well above the 202p level seen in November before news emerged of the offer talks.

Sir Peter was leading a buyout team made up of executive management.

Analyst Gareth Evans at Investec Securities said the profits guidance was about 32% ahead of Investec’s forecast. He said: “This is clearly good news for the group and does come as a surprise.”

However, he believed that at current share price levels the bid termination outweighed positive trading, and said he would be recommending a switch into technology stock Morse.

Computacenter was worth more than £1bn (€1.45bn) in the dotcom boom but competition in the sector has hurt the operation since then.

In June, its shares plunged 23% as it followed a 10% first quarter sales drop with a warning that business remained just as tough.

The group is due to report results on March 14.