Logica ponders sale of wireless division

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The Independent Online

LogicaCMG information technology group, yesterday raised the prospect of selling its loss-making wireless networks division, the business that prompted a profits warning in May.

LogicaCMG information technology group, yesterday raised the prospect of selling its loss-making wireless networks division, the business that prompted a profits warning in May.

Its interim results yesterday revealed the division made a loss of £6.5m in the six months to June 30 compared with £0.8m last year. The company issued a statement yesterday in response to the question of whether a sale was on its agenda. It said: "We are here to deliver medium- to long-term value to our shareholders and as part of our regular planning process we evaluate the way forward for all our businesses and markets including the wireless business."

The May profits warning resulted from longer than expected delivery times in its wireless division.

Yesterday Martin Read, the LogicaCMG chief executive, confirmed revenues had declined for the division, which supplies software for mobile phone messaging and which analysts had identified as a key driver of growth for the company in future years.

Commenting on the division, Mr Read said: "You're not looking at a business which in the next 12 months, is going to see growth. It's about watching the pennies and trying to get maximum value out of what is a well-positioned business for the medium term ... rather than nothing which is where its valued at the moment."

Investors had been looking to the wireless division to grow rapidly on the back of demand for its software which will drive messaging functions in the new third generation (3G) phones. These will include video and picture messaging.

However, a higher proportion of orders than expected have had extended delivery times forcing the company to delay booking revenues.

The company did report that there was still a strong order flow in both its wireless division and its IT services business, which offers technology solutions and consulting services for various business sectors. Overall the group reported a first-half fall in revenues of 5.1 per cent to £809.2m. However, cost savings meant that operating profit was up 3.8 per cent to £46.1m for the six months to June 30.

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