Market Report: Sage wises up again to threat from Microsoft

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The Independent Online

It is now nearly seven years since Microsoft took on the UK accountancy software group Sage by buying Great Plains, a US competitor. However, Sage has held up remarkably well against the world's largest software group and strong results on Tuesday from another US rival, Inuit, gave Sage a boost, sending the shares 4.25p firmer to 233.5p.

When Microsoft bought Great Plains, many pundits predicted a rapid demise for Sage, but the company remains the last technology survivor to remain in the blue-chip index and in robust health. This month Sage completed the £297m acquisition of the Florida-based Emdeon Practice Services, a provider of software solutions to the medical industry, and traders said they expected more deals from Sage in the second half of the year.

Despite posting record results, a $3bn (£1.6bn) share buy-back programme from the mining giant BHP Billiton was described as "miserly" by one trader and dragged back the whole mining sector. BHP led the FTSE 100 fallers, shedding 42p to 1,014p, while traders booked profits in Anglo American, 90p worse at 2,380p. Talk earlier in the week that Anglo is in line for an $80bn break-up bid now seems to have run out of steam.

Mining issues led the way down as the FTSE 100 fell 42.6 to close at 5,860. With many big players out of the market during August, some traders fear selling pressure will increase in September as bearish sentiment grows.

Uninspiring first-half numbers from the FTSE 100 newcomer Slough Estates encouraged selling across the property sector, with particular weakness in the value of company's US holdings. Slough fell 24.5p to 636p, while Land Securities and British Land, the UK's two largest landlords, fell 35p to 1,887p and 15p to 1,347p respectively.

Investors seem sure that Matalan, the discount retailer, will receive a cash bid from the founder and 53 per cent shareholder, John Hargreaves, sooner rather than later. However, there are whispers that the bid will come in at no more than 185p, and some traders have taken out short positions in the belief that if a bid disappoints the shares could track back to the 140p level. One trader said: "It is a risky play but the upside probably outweighs the downside. A 220p bid is not going to happen but if Mr Hargreaves decides against a bid or fails to raise sufficient funds the shares will tank." Matalan closed 4.75p firmer at 177p.

In what one market maker declared "the quietest day of the year so far", most small-cap movers were blamed on scrappy retail buying and selling and a complete lack of institutional trade. Regal Petroleum rose 6.25p to at 118p although the rumours are that it is no closer to a formal bid now than it was when it announced it was in bid talks on 4 July. Market makers put yesterday's gains down to short sellers closing positions.

In other small-cap oil stocks, Hardman Resources took a 5p hit to close at 60p after it confirmed that its Chinguetti well in Mauritania would yield about half of the expected 123 million barrels of oil.

Surprisingly, one of its partners in the Chinguetti field, Premier Oil, was among the best performers in the mid caps as the brokers Evolution Securities and Oriel reiterated their "buy" stance on the stock. Premier closed 56.5p better at 1,042p. Another Chinguetti partner, Sterling Energy, fared less well and fell 3.25p to 20.75p.

Caffè Nero, the coffee bar chain that is in takeover talks, may get a formal approach in the next few days. The investment bank Goldman Sachs, thought to be acting on behalf of the still-unknown buyer, upped its stake in the group to 5.6 per cent as the shares added 1.5p to close at 251p.

Retail punters continued to back betinternet after the departure of the executive director Simon Nicholls on Monday. With consolidation talk rife in the online gambling sector, investors are betting that the company is now in play for a bid. However, market makers noted that one institutional investor was using the recent spike in the price to trim its position. The shares closed 0.62p firmer at 7.37p, a rise of 9.2 per cent.

Traders will be on the lookout for news from the drug-detection technology minnow Avacta, up 0.13p to 3.75p. It is expected to announce a tie-up with the US biotech company UCB Celltech, and confirmation of the deal could come today. Celltech will use Avacta's proprietary technology to speed up its drug-testing process, and should the trial prove successful, up to 50 biotech companies are thought to be interested in Avacta's technology.

Finally, expect a strong showing from Peach Holdings today, off a penny at 348p, after the US financial services group, which is listed on AIM, confirmed after the close it was in talks that may lead to an offer being made for the group.