Give credit to GUS and hold on to the retail giant

No Silvio lining for Autonomy; Merged ParthusCeva looking chipper
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The Independent Online

Credit is something GUS is more than familiar with - the retail conglomerate's biggest money-spinner is Experian, a business that runs credit checks on consumers planning to take out a loan. Credit is also something due to the management, after a stellar first-quarter performance that saw sales soar across all of the GUS businesses.

The group, which also owns Argos, Homebase and most of Burberry, is a perfect play and has seen its shares leap by two-thirds since March.

Its high street retail chain Argos is a cheap source of pretty much anything that shoppers might need to buy. Should the retail environment deteriorate over the coming months, Argos' value-for-money offering will be just the ticket for penny conscious shoppers. Its 8 per cent like-for-like sales rise beat the market and City expectations, buoyed by lower prices and more choice.

In Experian, which offers an entire gamut of financial services, the group has benefited from the outbreak of mortgaging fever infecting the US and Britain. Its credit-checking business has cashed in on a record quarter for the mortgage sector in the US and enjoyed similar success here. In dollar terms, Experian North America grew sales by 14 per cent in the first quarter, while sales at its international division jumped 22 per cent. That is bound to slow, what with the harbinger of a recent rise in long-term US interest rates and evidence of a housing slowdown in the UK.

But worry not. Also lurking within the GUS conglomerate is Homebase, the do-it-yourself retailer it bought last December. This, according to perceived retailing wisdom, should lure in those who have opted to redecorate rather than move house. Homebase's 3 per cent like-for-like rise in sales may have lagged rival Kingfisher's B&Q, but it is still early days for the chain under the GUS umbrella.

After such a strong rise (the shares added another 24p to 729p yesterday), locking in profits never hurts, but keep some shares, if only to fund that new kitchen when you can't afford to move house.

No Silvio lining for Autonomy

It has long been a tactic of big business to put off payment to its suppliers for as long as possible, but you might think that was beneath the Italian government. Not so, it seems, and Silvio Berlusconi's late payment put a little bit of a downer on what were otherwise impressive figures from the pioneering Cambridge-based software group Autonomy yesterday.

Despite the depressed state of the software industry - whose customers have targeted IT budgets for cost cuts since the start of the economic slowdown - Autonomy has eked out a small rise in sales to $12.5m for the three months ended 30 June. Its products allow companies to search through the mountain of data stored internally on computers and in video archives and through the internet. It is unique technology and the company will undoubtedly prosper when business software spending returns to more normal levels.

Those looking for clues as to when that will come will find none in Autonomy's figures, since the company makes its software licence sales very quickly and has virtually no visibility on future sales. It is not clear, either, that Autonomy's products will be first in the queue when the upturn comes because, while they undoubtedly improve organisational efficiency, there are basic IT functions whose recent neglect means they must be upgraded first.

There may be no hurry to buy Autonomy shares, in that case. Stripping out its cash cushion, the shares (up 10p to 180p) trade at a discount to the rest of the sector, but after a Nasdaq-inspired rally it is the rest of the sector that is overvalued. Hold.

Merged ParthusCeva looking chipper

ParthusCeva was a marriage made in hellish conditions at the bottom of the semiconductor industry downturn last year. Splicing Ireland's Parthus Technologies with Ceva of the US, the new group has found it easier to licence its microchip technologies to the chip makers, since it can now offer design services and range of products integrating the technologies of the two former companies.

The driver continues to be demand for its "digital signal processor" cores, which help products such as Minolta digital cameras, Microsoft's Xbox and Ericsson mobiles to perform their multi-media functions. The group had revenues of $9.1m in the three months to 30 June, in line with expectations and showing an improvement on the previous quarter. That is a long way shy of the combined companies' revenues this time last year but royalty income is at least going in the right direction and, crucially, there have been some impressive recent deals licensing ParthusCeva's technology to two of the world's top five chip makers.

With a new chief executive on board, the company looks like it is going in the right direction, although it will take a few more quarters of licence deals and a fair wind from a recovering semiconductor industry before we can be sure.

The shares are high risk, especially after a strong run, but 535p is a fair price for a company with strong technology.