Remain sceptical about LogicaCMG's claims
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The Independent Online

LogicaCMG, the information technology services group, delivered an upbeat trading statement at its annual meeting yesterday helping to lift the shares 2.83 per cent to 172.75p.

LogicaCMG, the information technology services group, delivered an upbeat trading statement at its annual meeting yesterday helping to lift the shares 2.83 per cent to 172.75p.

This is a relief for shareholders after a consistent flow of disappointing corporate news from the Anglo-Dutch business run by Martin Read.

LogicaCMG core business is to provide technology solutions for big businesses and the public sector. It develops and integrates IT systems and offers outsourcing facilities for business processes. The other part of its business is a mobile phone software operation that supplies operators with technology that helps run their text and picture messaging services.

Yesterday, with just a quarter of the new business year under its belt, LogicaCMG told shareholders that performance for the full year is expected to show a "significant" improvement over 2004. Such optimism is based partly on first quarter order bookings that have risen 37 per cent compared to the same time last year.

Sadly, LogicaCMG's poor track record of keeping promises means investors would be wise to treat the statement with scepticism. It says restructuring in its French business and improvements to its German business are on course to deliver improved performance. Things are also looking up for its its mobile phone operation, as revenues stabilise and costs fall.

LogicaCMG has made "jam tomorrow" statements before only to disappoint with profit warnings. Investors should wait for more concrete results later this year before spending money on the company's shares.

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