James Moore: A cautionary tale about a float that's sinking

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Outlook Just when Betfair had you thinking the water was warm enough to take the plunge and float, along comes a cautionary tale. This time it's from Promethean World. If that sort of name makes you think "oh dear, tech company", you'd be right. Promethean makes whizzy interactive whiteboards, used in schools and other places where education is the primary activity.

Unfortunately, in Promethean's case the word "float" should have read "sink", because that's what the shares have done, falling to less than 50 per cent of what investors paid when the company joined the London Stock Exchange in March.

That's some achievement, the sort of thing that used to be commonplace when people were falling over themselves to buy crazy companies with crazy business plans just before the dot.com bubble was popped at the end of the Nineties. Is Promethean doomed to follow them? Probably not. Probably.

Yesterday's rout was sparked by the company's latest trading statement. While sales were up and the company maintained confidence that it could deliver results in line with expectations, the market was well and truly spooked by comments Promethean made about the US market, where it has detected signs of a slowdown in education spending. Yes, this is another company heavily reliant on taxpayers, either in the UK or elsewhere, for its living. So it's another company where the chickens of spending cuts are coming home to roost.

Those who bought in at the start might remember with a sour taste the words of Jean-Yves Charlier, chief executive, who promised "superior value" for shareholders when the flotation was announced.

Promethean is no dot.com. It's sitting on just over £14m after payment of its interim dividend (a word that was not in the vocabulary of the tech boom casualties).

The long-term market for the company's kit appears to be reasonably good – only a relatively small number of schools possess interactive whiteboards, after all.

There is the capacity here for the shares to recover. But if a recovery is in prospect, it's likely to take a long time. A very long time.

Oh, by the way, investors might like to remember the bankers who were banging on their doors with Promethean's exciting investment story in the run-up to that flotation. Step forward Goldman Sachs (yes, them again) and JP Morgan Cazenove.

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