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iomart shares set to jump on upbeat news – Scotland on Sunday

23rd November 2003 · Investor News


IOMART, the Glasgow-based internet group, is expected to announce it is closer to hitting profitability this week in a move which could spark further share price gains.

Its results, likely to show a reduction in half-year losses, will also be accompanied by the first broker research note to be published on the company in almost three years.

The resumption of research coverage comes amid increased interest from institutional investors in the firm.

Iomart, which has already seen its shares rise by more than 1,300% this year, is predicting it will hit month-by-month profitability by the end of the current financial year.

News of further progress and more orders, particularly for its NetIntelligence security product, could provide a fresh boost to the company’s share price which has risen from a low of 3.5p to close on Friday at 47p.

House broker KBC Peel Hunt will issue a research note to coincide with Tuesday’s interim results.

Iomart’s plunge in market value after technology shares crashed meant it became too small for most institutional investors to consider. But recent months have seen a clutch of new investors, including Artemis, take stakes in the firm and the resumption of broker coverage is likely to attract further interest.

The company’s dramatic share price rise has given recent investors a huge return on their stake although those who bought in at its post-flotation peak in 2000 when it hit more than 90p are still significantly out of pocket.

"The price fell to levels which were just silly although you have to look at its current standing in the context of the flotation price," one analyst said.

"But what has been impressive about the company is the way it has managed to guard its cash pile during difficult times for the technology sector.

"It has managed to build up and sell parts of the business for good prices when other technology companies have just disposed of businesses for next to nothing and incurred huge write-offs."

The company sold off its ‘madasafish’ internet service provider two years ago for £3m and early last year also sold its loss-making broadband business, which had its support base in Stornaway, to Centrica in a £2m deal.

At the end of May this year the group had cash balances of £3.6m and raised a further £770,000 in a placing with institutional investors in July.

Iomart specialises in e-mail and messaging software and services to small businesses and on web services.

Both arms of the business have won significant new contracts this year.

Its NetIntelligence product, bought two years ago from the receivers of Glasgow-based Actis Technology, protects computer networks from viruses and spam and enables companies to monitor staff usage of the internet.

Its web services division provides hosting architecture, infrastructure and web management.

Earlier this month Scotland on Sunday revealed that Iomart directors, including co-founder Bill Dobbie, who have been buying shares in the company over the past year, have seen their combined investment of £153,900 turn into £1.74m as the price has continued to soar.

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