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MARKET COMMENT
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The season of profit warnings continues, particularly so in the US. The latest high profile US company to warn was telecoms giant AT&T (NYSE: T), which also slashed its dividend. Further down the technology food chain, Internet media software company RealNetworks (Nasdaq: RNWK) also warned of weaker-than-expected quarter 4 results. The evidence surrounding a rapidly slowing US economy continues to mount. Here in the UK, London Bridge Software (LSE: LNB) was the latest company to release a trading statement. It provides software solutions and consultancy services in the credit risk management market. This places it well and truly in the technology sector. The shares peaked at 1558p in March this year. They now stand at around 340p, a plunge of almost 80%. Today's statement from London Bridge began with a raft of positive news. Only on digging deeper do you get to the real meat. "...we have not yet met our budgets for our US operations and accordingly there can be no guarantee that we will do so," and; "Whilst we can not guarantee the performance for this year at this stage [a strong order book] augurs well for the future." This profit warning from London Bridge again highlights just how uncertain the near term outlook is for the US economy. And the UK usually follows the US, although the slowdown may not be quite as savage. The bad news keeps flowing. The stock market hates uncertainty, hence the continued carnage, particularly on the Nasdaq and the techMARK. The London Bridge statement confirms the market's worst fear -- not being able to "guarantee the performance for this year" is a very clear message. In the short term, the business has no sense of predictability. Despite this, London Bridge remains confident of its long-term prospects. Investors have to adopt the same mentality. Look past the next few months. Looking long-term gives private investors the edge over the market, and the City brokers and fund managers. When all around are panicking, now is the time to use that edge. But don't forget the big lesson of 2000 -- valuation ultimately matters! Where Next?
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