Maid shocks investors with profit warning

Cathy Newman
Friday 17 October 1997 23:02

Maid the electronic information company which earlier this month doubled its size by buying Knight-Ridder Information, yesterday shocked investors by issuing a profits warning. The news came as Maid unveiled details of a share placing to raise pounds 119.9m for the acquisition. Cathy Newman reports.

City analysts were surprised but unruffled by the statement that client uncertainty as a result of the deal was likely to have an impact on Maid's revenues in the fourth quarter this year. Sales in the third quarter were virtually flat, Maid said.

The company said that the impending acquisition had caused some clients to defer new subscriptions.

"Through September, clients have increasingly adopted a `wait-and-see' stance to signing new contracts, due to the uncertainty of details of merged product offerings and related pricing structures," Maid said.

However, Dan Wagner, the company's flamboyant chief executive who will head up the newly merged group, denied the statement was a profit warning.

"I see it as a clarification of current trading," he said. "I thought the statement was very upbeat. We don't want people to be under any illusions of the impact of a deal of this size for a small company such as Maid."

Mr Wagner said the placing of 54.5 million shares at 220p a share had been two times oversubscribed, reflecting excitement about the deal in the City.

Chris Sielern, technology analyst at Bryan Garnier, a brokers specialising in technology stocks, said the warning on revenues had come out of the blue but was not a worry.

"Sure, it's a profits warning, but they still expect to have growth above 40 per cent per annum on the Maid side of the business", he said.

He added that in the past few months, management had been focusing on other things. "This has just affected one quarter, which is why I'm not really worried about it."

The merged company, to be called the Dialog Corporation, will be the world's largest online information provider. Maid will raise the rest of the money needed for the $420m (pounds 261m) acquisition through junk bonds and new debt.

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