Nynex: cable comes to the surface

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The Independent Online
In its quarterly review of UK cable operators, Salomon Brothers highlights Nynex CableComms (107.5p) as the most promising of a rather lacklustre bunch. Since their appearance on the UK scene over the last two years, cable companies have failed to live up to their initial promise.

As our graph (right) shows, this is true too for Nynex. But the difference is that the latter has begun to show some clear signs of moving ahead of the pack. Its cable telephony business is gaining ground with surprising rapidity, and a first half net loss per share of 3.8p is a decent improvement on the 4.7p loss for the same period in 1995.

With all the excitement of convergence, and the exciting new world of multimedia and delights such as video-on-demand around the corner, the shares are a buy.

ON AIM (Alternative Investment Market), tribulations abound at Memory Corporation (26.5p), the computer memory chip business. The early hype must by now have evaporated with even the most die-hard of investors.

Interim results released last week showed a loss before tax of pounds 3.1m. Despite pounds 2.9m in the bank, the losses suggest the group is likely to require a fund raising exercise at some point. Sell.

SO WHAT to keep, and what to sell in the pending demerger of Hanson? On October 1, shareholders will be given new shares in Millennium Chemicals and Imperial Tobacco.

Millennium looks to be a sensible share to sell. It will have high gearing, at a time when the chemicals cycle appears to be peaking, or already has in some markets. It will also be off-putting to many UK investors, as it will only retain a US listing.

Imperial, despite adverse publicity over tobacco cases in the US, may however present a stronger financial case for holding on to the shares.

STILL with flotations, Thistle Hotels is about to make the largest hotels offer ever. At a market capitalisation of upwards of pounds 1bn, to raise pounds 402m, Thistle will take a sizeable bite out of investors' wallets.

While the group has an attractive collection of assets, the mini frenzy for hotel stocks seems to have been abating. Thistle could prove an attractive long-term investment, but there seems no point in rushing in to buy the shares, which are unlikely to go to an immediate premium. Wait until the fizz has evaporated, and see how the price performs, before committing cash.

DANKA Business Systems looks like breaking into the big time with its deal to acquire Kodak's office imaging business. That may be a good thing. Or it may not. For as followers of the company recall only too clearly, the shares fell out of bed in June after it issued a profits warning because of cost increases through hirings of North American sales staff and engineers.

They hit a 12-month low of 388p, before recovering to their current level of 682.5p - up from 475p on the announcement of the Kodak deal, which will cost Danka $684m (pounds 456m).

Although the company has consistently increased revenues, it has yet to dispel some lingering doubts about its capability to continue growing at its current breakneck pace. Only for the brave.

SHARES in Pace Micro Technology have kicked off to a convincing start in the time since their flotation in June at 172p. Now 217p, the group - which supplies digital decoders to European satellite TV broadcasters - produced an excellent set of maiden figures.

The expectation in the market is that the business is set to continue bringing in new orders. Already Europe's biggest manufacturer and supplier of this equipment, it also has the potential to expand in the United States, which could prove an extremely lucrative market. Buy.

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