Relieved City ready to listen to Dialog again
Friday 19 March 1999
Dan Wagner, chief executive, said the company would probably make announcements in the next few weeks. "We would not be making these kinds of statements if we weren't close to a number of things."
The deals are thought to include Dialog licensing its Infosoft software, which automatically categorises Internet documents, to others. It may also sign up strategic investors for its e-commerce division.
The announcements, when made, will help to speed Dialog's rehabilitation after a disastrous profits warning last year. The warning shattered confidence in Dialog's management, which had promised it would revive revenue growth after it took over Knight-Ridder Information, the online information group, in a reverse takeover late in 1997. Dialog shares lost two-thirds of their value, touching a low of 47p in January.
Mr Wagner admitted that the company had promised too much. He said that in the future Dialog would take a more measured approach. That was underlined by yesterday's full-year results, which showed Dialog reporting pre-exceptional pre-tax profits of pounds 8.4m. The figures, in line with expectations, were greeted with a 9.5p rise in the shares to 95p. "The market is basically breathing a huge sigh of relief," said Patrick Yau of Nomura Securities.
Others said Dialog's reassurance that it would be able to meet its debt repayment targets for the current year also helped. The company finished last year with a debt load of $256.6m (pounds 157m). Apart from interest payments, it is due to repay $21.9m this year. Mr Wagner said Dialog was considering restructuring its debt, but he ruled out another rights issue.
From April, Dialog is due to be reclassified in the Internet subsector of the market IT index. Dialog looks undervalued, but the City will probably take a little more convincing before it rushes back in.
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