Crash-proof technology firms
Sunday 12 January 1997
I wrote about them in May last year when MSB stood at 245p and Ideal at 605p. Although very different - Ideal distributes data storage products, while MSB supplies IT personnel on short-term contracts - they share an aggressive sales approach. Each has dedicated sales forces who make most, or all, of their income from commission. Both manage to grow sales aggressively without compromising quality. Ideal has won a string of awards, while MSB prides itself on never promising suitable contract personnel without being able to deliver.
James Wickes, the 35-year-old businessman behind Ideal Hardware, says that given the prospects he and his colleagues would "need to be idiots" not to take advantage of the market.
According to Dataquest, the European data storage market is expected to more than treble from $6.6bn (pounds 4bn) in 1996 to $22.9bn (pounds 13.7bn) in 2000. If Ideal can just hold its market share, it should do well. Between 1992 and 1996 turnover grew at a compound annual rate of 46 per cent, from pounds 30.4m to pounds 138m and by 24 per cent in the last half-year from pounds 60.9m to pounds 75.6m.
Ideal Hardware is a wholesaler supplying re-sellers of computer equipment. Demand is booming because of the ever-increasing requirements for storing data. Part of Ideal's market edge comes from keeping its customers up to date with technology. In addition to comprehensive catalogues and CD-Roms, it broadcasts a daily television programme covering new product developments to many of the 8,500 re-sellers it supplies. The Internet is becoming a highly cost-effective way of informing customers.
Growth will benefit from a new 70,000 square foot warehouse at Chessington with the capacity to expand. Cash generation is strong, enabling the warehouse to be financed largely out of working capital. The year end is changing from 30 April to 31 July with a second set of interims due for the six months to 2 May 1997. Recent forecasts suggested earnings per share rising at around a 20 per cent rate to 29.5p for 1996-97 followed by 36.4p. My hunch is earnings for the later period could be nearer 40p, implying a price earnings (PE) multiple somewhere around 17.
MSB International, which is due to report its first set of full year figures as a quoted company in mid-April, is arguably growing even faster. Demand for qualified personnel is buoyant as the "millennium problem" - the inability of many computers to distinguish between the year 2000 and the year 1900 - joins with other requirements such as Europe moving to a single currency and firms introducing networked computer systems. It adds up to soaring demand and charge-out rates for IT contractors. MSB rates have risen by 11 per cent and the number of con- tractors has climbed to over 1,300.
Growth seems likely to continue with qualified IT personnel becoming scarce. At the halfway stage last October, MSB's sales climbed 91 per cent to pounds 30m with pre-tax profits up 71 per cent to pounds 2.35m. Margins slipped from 9 to 8 per cent partly because of fewer permanent placements and the distractions of flotation. A move to larger premises is helping growth, and margins are expected to rebound in 1997. Full-year profits should reach pounds 5.5m for the year to 31 January 1997, dropping the PE to 22.5 times, with a further sharp fall likely in 1997-98 as turnover heads for pounds l00m, taking profits to a likely pounds 8m-pounds 9m.
- 1 Howard Jacobson: Let's see the 'criticism' of Israel for what it really is
- 3 Belgium fan Axelle Despiegelaere lands L'Oreal campaign after World Cup viral photo
- 4 Britney Spears sings 'Alien' without Auto-Tune in embarrassing leaked audio clip
- 5 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
Instagram of US airport security chiefs: Lipstick knives and IED training kits among items seized
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Mick Jagger denies being World Cup curse and reason for Brazil’s embarrassing defeat
Israel-Gaza crisis: ‘We just want it to end… We don’t deserve to live like this’
Israel-Gaza crisis: Eight killed in Gaza Strip cafe while watching World Cup semi-final
Sustained immigration has not harmed Britons' employment, say government advisers
Australia facing international condemnation after turning around Sri Lankans at sea
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
There’s a nasty smell in the political air – and it’s coming from the Tories
iJobs Money & Business
£300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...
£28000 - £32000 per annum + pension, 25 days holiday: Ashdown Group: A highly ...
Negotiable: Randstad Education Birmingham: Randstad Education are seeking a Fi...
£12 - £15 per hour: Cameron Kennedy Recruitment: Excellent opportunity to join...