Mobile strategy gets mmO2 moving forward

Savills has roomy prospects; Hold on to Taylor as NFO deal pleases
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The Independent Online

Roll up, roll up, get your "mobile data services" here - multimedia messaging services, java games, instant messaging - all on your mobile phone.

The geek-speak to describe the kind of stuff you can now do on your mobile phone, over and above making voice calls, will leave most people cold.

Yet it is precisely these new services that will drive growth in the industry and don't the mobile phone operators know it. The battle is well and truly on to grab and keep those customers who will pay to download games, send photos, pictures and e-mails.

Yesterday's "mobile data" strategy presentation from the mobile phone operator mmO2 was, pretty well, a more concise version of what its rival Orange said only last week.

The major difference being that Orange is a company battling against a widely-held perception that it has lost its edge, while mmO2 is a business still trying to prove it has an edge.

The early signs for mmO2 are encouraging. It reckons it remains on track to have 25 per cent of its revenues from "mobile data" by the end of next year - up from about 17 per cent at the moment.

Much of that is text messaging - where it estimates it has about a third market share in the UK. But stripping texting out, mobile data is about 5 per cent of revenues - up from 3 per cent a year before.

Threats are lurking everywhere. The 3G operator 3 has just slashed its prices in an effort to steal market share while its other rivals will, no doubt, be equally aggressive.

But the softly, softly approach employed by chief executive Peter Erskine has, so far, delivered the kind of results that have put him in the City's good books.

The recent £10bn pre-tax loss, after write-downs and exceptional items, masked the fact that the company is making good headway operationally. The loss-making German operation is being slowly turned around, its Dutch arm has been sold off and it has done a savvy deal with rival T-Mobile to help save money on next generation network roll-outs. At 56p, down 0.75p, the shares are a buy for the long term.

Savills has roomy prospects

As the evidence of a slowing housing market begins to pile up, the pressure on Savills, the estate agent and property consultant, increases. But the company yesterday said that although it was "facing tougher trading conditions" this year as prices slow and tenant demand remains weak, it was "cautiously confident" of its prospects.

Savills does not just sell posh houses in London, where house prices here have fallen significantly. Regional prices are more resilient and the company yesterday said demand for commercial property has remained strong as investors look for an alternative to equities. Commercial property accounts for around 45 per cent of its business - residential property is only 25 per cent. The company also has worldwide operations in the US, Asia, Australia and Europe, against which it can offset a poor UK market.

Neither is Savills purely an estate agent. It also has a consultancy business, a property management division, and a mortgage broking arm, giving it a diverse revenue stream when the residential property market tails off.

Investors can also take comfort in the £56m it has in cash. This is around half its market capitalisation, giving it a solid foundation while conditions remain wobbly. Its dividend yields more than 6 per cent and the company yesterday committed itself to a share buy-back programme at as much as 180p a share. At 171p, Savills is trading on only six times earnings. It may yet have some growth in it. Buy.

Hold on to Taylor as NFO deal pleases

Taylor Nelson Sofres, the market research company, yesterday warned investors that the first half of the current financial year is turning out to be tougher than expected.

TNS delivers both regular and one-off research on a wide range of sectors and it is about to pull off its biggest deal since 1997, the $425m (£255m) acquisition of NFO WorldGroup, another market research business.

Ahead of delivering interim figures, TNS said it is now anticipating underlying revenues to be "broadly flat" for the first half - formerly a little growth had been expected - which means the company will have to see a considerable turnaround in the second half if it is to meet market expectations.

However, it was resolutely sticking by its guidance yesterday that this year as a whole will see low single digit growth - the shares closed off just 3p at 165p yesterday.

In the Media Intelligence business clients have been cutting back. Healthcare has been hit by a slowdown in new product development.

The company's regular consumer panel work, which measures trends such as shopping habits, and customised consumer research, continue to do well.

TNF shares have risen from 99.5p in April because the NFO deal has been well received - Smith Barney expects it to boost earning by 33 per cent in 2004. The stock is on a forward multiple of 18 times current year earnings but that then falls sharply. Hold.

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