BZW's judgement is sadly lacking

No-one emerges smelling of roses from the debacle of Premier Farnell's bungled profits warning on Wednesday. As the smoke clears and the company starts on the long road towards rebuilding its credibility in the City, it is evident that the company has been stunningly naive. It now seems it was also strangely advised by its broker BZW, whose bad luck is becoming habitual.

Hell hath no fury like an analyst denied the nod and wink that ensures his credibility remains intact. Yesterday brokers were, to say the least, irritated that Premier Farnell's grand promises at the time of last year's ambitious US expansion were proving so much wishful thinking. But they were apoplectic that they hadn't been let into the secret at an earlier stage.

It is easy to understand Farnell's reluctance to come clean so soon after it had leant over backwards to persuade restive shareholders of the merits of an expensive, ambitious foray into the challenging US market. But it is not an excuse and the ostrich approach to information dissemination is rarely successful.

The company's naivete was apparently underlined by the deathly pallor of finance director Andrew Fisher's face when he saw his share price in free fall yesterday morning. He had no conception, brokers said, of the extent of the City's disappointment, so it is perhaps not surprising that he had not previously thought profits 8 per cent below expectations were worthy of comment.

But the finger is arguably better pointed at BZW, which is paid to understand these nuances. Changing its advice to its client on the morning of a round of analysts' briefings, and allowing that client to spook the market by simply failing to show up at those meetings, was clumsy at best. It is hard to imagine that relationship surviving.

To mess up royally once can be excused as misfortune, but in the past two months BZW has shown lack of judgement on other occasions. Upsetting the Takeover Panel during its defence of Northern Electric against CalEnergy's bid, the institutions it put into RJB Mining before downgrading its profit forecast, and now a valuable client, is not a recipe for success.

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