For those who took our advice and bought it may all have come as a bit of a shock: the shares had crawled up to almost touch 200p, before slipping all the way back and more to below their pounds 1 flotation price by December.
The reason for this change in fortune has been partly one of perception. While the company is behind the forecasts it made at the time of flotation, it has shown that there is growing interest in its main product, TANet. The underlying quality of the business, however, is little different from when it first came to market.
Fibernet builds and leases long-distance fibre-optic telecommunications networks for business. Last year, the company could boast sales of pounds 7.2m, mostly from local area networks. That will pale in comparison with the money it hopes to gain from TANet, a national network for data transmission. Several financial institutions have signed up for the service, which is much cheaper than using existing telecom links.
Stockbrokers Greig Middleton reckon sales will rise to pounds 13m this year - TANet's order book is around pounds 6m and rising - to produce pre-tax losses of pounds 45,000. But if sales hit pounds 21m in 1999, profits could hit a remarkable pounds 6m, which would mean an earnings multiple of 25 times. If that is expensive, it is still not overly so for a hi-tech business that could hit paydirt in a big way.
If the shares have caught up with their potential to some extent, there is almost certainly further upside - although investors should beware of hiccups along the way.
There may be some demanding cash-raising exercises ahead, although if the City likes the story, that should not dampen interest. A still somewhat speculative buy.Reuse content