This page is quite old hence its rather spartan appearance.
Why not check out our Latest Stories page for our newest articles or search our site for anything.
By
What has this Anglo-French software company done to deserve such treatment? A profits warning, that's all. It is not as if it has reported a big loss, it is just that profits this year will be about the same as last, and revenue growth next year will only be about 12%. And for highly rated, supposedly fast-growing companies there can be no greater sin.
Much of the blame in this case can be laid at the door of the acquisition of LHS. Although it was announced in March, it did not complete until the end of July. That delay caused uncertainty and led to a halving of sales in the third quarter. But the problem seems more widespread than that. It says revenue in the second half for the whole group is only up 13%, and 6% if LHS is excluded. It also reports that sales in outsourcing are 10% lower than last year due to postponement of orders and greater selectivity in contracts. As a result of these various effects profits will be the same as last year, and that didn't sit easily with a price to earnings ratio of 41. After the fall today that ratio is only 25, a bit more justifiable.
There is usually a bit of good news in these profit warnings to alleviate the gloom, and there is here. Sema says mobile telecom products are enjoying good growth and margins are rising from 4% to 6%. While it is relatively upbeat about the prospects for next year many investors know that profit warnings rarely come on their own. The risk must be that there will be more in the pipeline. The savage treatment of Filtronic (LSE: FTC) yesterday, a 24% fall, is a classic example of what happens when a company gets a reputation for frightening the market.
What Next?
• Have a look at the Sema discussion board where TMF Venturian has kindly posted the full text of the trading statement from Sema.