CMG predicts sharp upturn in mobile messaging division

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The Independent Online

The Anglo-Dutch IT services group CMG revealed yesterday that it expects sales at its key wireless unit to soar by about 30 per cent this year, sending its shares 9 per cent higher.

CMG said the wireless division, which provides text messaging software for mobile phone operators and accounts for 15 per cent of revenues, would post an operating profit in the current year. Despite returning to profitability in the second half, the unit made an operating loss of £19.7m from £42.3m profit a year earlier as European phone companies cut spending.

The group will match the £55m it invested last year in the division but expects research and development costs to fall back from 2003. It said revenue from the deal it won earlier this month to provide the mobile phone operator Hutchison 3G with so-called "multimedia messaging services", which will allow users to send and receive messages that include pictures and video clips rather than just plain text, would come through strongly in the second half.

The comments came as CMG unveiled a 65 per cent fall in pre-tax profits, a £564m goodwill write-down, mainly related to its acquisition of Admiral, and announced that its long-standing chief executive was stepping down.

Tom Rusting was replaced by Alistair Crawford, who moved up from his role as chief operating officer. Mr Rusting said he was leaving to look after a close relative who had fallen ill. He said he would still be available to do "small jobs" for CMG.

Even before the exceptional charges, CMG saw its profits for the year to end-December fall to £40.4m from £117m previously on sales up 13.6 per cent at £920.4m. Its shares rose 18.75p to 228.75p.