Small Talk: Firms join the rush to stick their heads high in the clouds
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Monday 03 October 2011
Cloud computing – or the delivery of computer programs and resources over networks like the world- wide web – is big business. Everyone, it seems, is rushing to get on the bandwagon, what with Apple's iCloud service getting ready for its debut and Amazon's newest Kindle harnessing the technology.
The growth in this market was apparent in last week's update from Iomart, the Aim-listed cloud-computing and web-hosting specialist. The business uses its data centre and infrastructure network to offer its customers cloud-computing services – and, thus far, demand appears to be strong.
Last week, Iomart said it was continuing to draw steam from "the growing trend" among companies to shift key applications to suppliers such as itself. And so, ahead of its half-yearly results for the six months to the end of September, it was able to confirm that it had "performed strongly, with revenues and profits significantly ahead of the comparative period last year, and consequently is confident that the financial performance for the full year will be ahead of current market expectations".
Looking ahead, it flagged up further growth, "as businesses move their critical IT systems to the cloud".
"There is strong momentum in the business and our pipeline of opportunities is growing," chief executive Angus MacSween said, striking a refreshingly optimistic note amid all the doom and gloom in the wider economy.
The share price reflects the company's progress, climbing by around 300 per cent – yes, I said 300 – since the beginning of 2009. You can probably guess the reaction in the City, where analysts welcomed the news that, despite the darkening economic backdrop, customers were still keen to move into the cloud.
"The Iomart business model of providing both data centres and network infrastructure, together with end service level agreements, is proving popular with businesses wanting to move to the cloud to reduce both operational risk and IT costs," Peel Hunt analyst Paul Morland said.
"Demand, so far, has not been impacted by macroeconomic concerns and we see no reasons why it should be, given the cost savings on offer."
Simon Strong at Evolution Securities also weighed in, upping his forecasts and saying: "The hosting market is seeing an extended period of structural growth, and Iomart is an excellent investment play on the associated rising volume of data traffic."
Quadrise boosted by shipping deal
Investors in Quadrise fuels received some good news last week. The company, which manufactures and supplies an alternative to heavy fuel oil for the shipping, refining and other industrial markets, said it had struck a deal with the shipping company AP Moller-Mærsk, AkzoNobel and Lithuania's Orlen Lietuva to conduct sea trials of its alternative MSAR marine fuel.
Ordinarily, heavy hydrocarbons need to be diluted with lighter oil-based dilutents in order for them to be used as fuel; the MSAR alternative uses water, instead of the most expensive oil-based dilutents.
The sea trials are an important step towards commercialising the product, and will begin with the installation of an MSAR manufacturing unit at the Orlen Lietuva refinery in Mazeikiai, Lithuania. That will be followed up by some production and then the sea trials, with the results of the evaluation program expected in the first half of next year.
"These sea trials represent a key milestone for the company and, potentially, for the marine sector. [Quadrise] and its partners have worked tirelessly to get to this stage of the marine MSAR evaluation," executive chairman Ian Williams said.
Reaction from analysts was positive, with Westhouse welcoming the tie-up. "The announcement of sea trials with Mærsk, the world's largest container shipping company, is a key corporate milestone for Quadrise," the broker said. "The pressures facing the container shipping industry to reduce costs and emissions could be met with the successful application of MSAR fuel." Westhouse also highlighted the wider uses of MSAR, with the company progressing on joint projects in other areas such as power generation and refining. Again, it has managed to rope in some big partners, such as PEMEX, the Mexican state oil giant.
AIM shrugs off summer gyrations
The summer months saw much in the way of volatility. And it has been fairly hairy since. But, despite the gyrations, AIM has witnessed something of a turnaround since July. The three months to September 29 saw 24 new companies making their debut on London's junior market, the highest quarterly tally since before the start of the financial crisis, according to figures from the accountancy firm UHY Hacker Young.
Moreover, the research shows that only 21 companies said goodbye to the AIM in the same period – the fewest to leave the junior market in one quarter since the second quarter of 2006. The result also marked an improvement on the second quarter of this year, when 42 companies left.
Of the companies that departed in the third quarter, most either moved up to the main market of the London Stock Exchange or left owing to dealing activity. Only 14 per cent left because of reasons connected to financial stress or insolvency, UHY said.
"That is the AIM market working exactly how AIM investors would like it to work," UHY partner Laurence Sacker said.
"Losing companies who are either graduating to the main market or being taken over by another company are signs of good health for AIM. It really shows what confidence companies have in AIM' s ability to take to the next stage in their development – most companies listing on the exchange will have these outcomes in mind when they launch their IPO."
For the all the good news, however, activity was hit by the turbulence seen across world markets.
This was evidenced in the size of the new listings, with the total money raised up to the end of August standing at £504m, according to UHY, down from £548m in the same period last year. "AIM's sheer size means that it has not been immune to the global flight from risk," Mr Sacker said.
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