Shares in CMG, the Anglo-Dutch IT outsourcing and mobile phone software group, rocketed 21 per cent yesterday after first-half earnings beat reduced expectations.
Profits fell to £17.9m from £50.9m last year. Analysts had forecast earnings of just £13m.
Sentiment was pumped up by a positive outlook statement that denoted accelerating growth in IT services revenue, while predicting that the group's text messaging software unit would operate profitably in the second-half. That saw CMG shares move higher throughout the day, closing up 48.5p at 262p.
Cor Stutterheim, the chairman, said: "We are growing significantly faster than last year in IT services. SMS volumes are growing and our revenues are returning in Europe."
The news prompted ABN Amro and other analysts to upgrade their recommendations on CMG shares to "buy" from "hold". On Tuesday, the stock fell 11 per cent to 213.5p amid a bungled share placing and analysts downgrades ahead of the results.
David Robbie, the finance director, said CMG's wireless data unit would swing to a £5m-£10m operating profit in the second half after a £22.6m interim loss. Mr Robbie also said double-digit revenue growth at the IT services unit was set to continue. "I see no reason why that should fall off," he said.
Mark Bryan, analyst with ABN, said: "CMG reported results which were significantly ahead of our and market expectations. CMG added that it expected the IT market to grow by 6 to 8 per cent in 2001 and by 12 per cent in 2002.