United kingdom Daily news: MARKET REPORT: More despair at Promethean

MARKET REPORT: More despair at Promethean

By Geoff Foster

PUBLISHED: 15:55 EST, 29 June 2012 | UPDATED: 15:55 EST, 29 June 2012

As it has so often done since the loveable Goldman Sachs floated it at Â£2 a share on the LSE in October 2010, making founder Tony Cann and other executives well in excess of Â£70m, Promethean disappointed and found itself at the bottom of the class.

Shares of the Blackburn-based educational technology firm crashed to 18p on yet another profits warning before closing down 12.75p, or 37 per cent at an all-time low of 22p.

The company warned that the expected high level of order activity in the US at the end of June has not materialised and first-half sales will now be in the region of Â£83m, compared with analystsâ€™ forecasts of more than Â£100m.

A computerised display of the FTSE 100 index

This has led to a high digit operating loss against expectations of a Â£5m profit.

Promethean warned only in April that US school budget cuts had hit revenues with sales in North America down a stonking 40 per cent. But it then tried to placate angry shareholders by saying that the key buying season from June to September would hopefully bring about a recovery. So far, no good.

Peel Hunt downgraded to sell from hold with analyst Alex Jarvis now expecting a loss of Â£7-8m in the first-half and a full-year outcome in the range of a small loss to a small operating profit.

Online grocer Ocado, yet another disastrous 2010 flotation masterminded by yours truly Goldman Sachs, came under renewed selling pressure after the very same investment bank removed the stock from its Pan European Buy List, downgrading to neutral. The shares touched 71.7p and closed 1.8p easier at 77.7p and a hefty 57 per cent below its float price of 180p.

Ocado said this week that third-quarter trading had been disrupted by celebrations to mark the Queenâ€™s Diamond Jubilee. The groupâ€™s vans apparently found it difficult to get around London. Whatâ€™s it going to be like, then, during the London Olympics?

Dealers smell another profits warning before too long.

Elsewhere, the Footsie ended the week with a flourish after EU leaders agreed to ease repayment rules for emergency loans to Spanish banks and relax conditions on potential help for Italy. The news had overweight bears scrambling to cover their short positions and a few brave fund managers filling their boots with oversold blue chips.

The close was 78.09 points higher at 5,571.15, while the FTSE 250 soared 243.84 to 10,932.13.

Sentiment was bolstered by Wall Streetâ€™s early leap of 176 points and by increasing hopes that the Bank of England will on Thursday sanction another Â£50bn of quantitative easing to help stimulate the UK economy. It would take the BoEâ€™s asset purchase target to Â£375bn. In a rejuvenated mining sector, Xstrata advanced to 821.5p before closing 5.1p dearer at 798.6p as Canaccord Genuity said it is likely that following pressure from major 11 per cent shareholder Qatar Holdings, bidder Glencore International (2p up 295.55p will increase its offered merger ratio of 2.8 of its owns shares to three for each Xstrata share. Should Glencore walk away, the broker warns Xstrata could fall 6.5 per cent.

Allied Gold glittered at 140p, up 48.5p, after agreeing a Â£360m cash and share exchange offer from Australian gold miner St Barbara. The deal creates a A$1bn mid-tier gold producer and exploration company. It is the largest deal in the sector since late 2010.

Sellers were all over Avocet Mining like a rash following a shock profits warning. The shares plummeted 60.75p, or 40 per cent, to a 52-week low of 90.05p after the West Africa-focused gold miner slashed its outlook for the full-year citing equipment availability issues and lower recoveries and processing rates at its Inata mine in Burkina Faso.

Avocet now expects its 2012 gold production to be reduced from 160,000 ounces to between 135,000 and 140,000. Shares in Latin-America-focused Gold Oil were suspended at 3p (down 0.25p) after a stormy AGM at which chairman John Bell, exploration director Ian Reid and non executive directors John Charlton and Guy Cowan were voted off the board. With Julian Garcia left as the sole executive director, the shares were frozen pending the appointment of new board members.

The boardroom battle was forced by Mark Pritchard and Ben Anderson, who own a combined 7.3 per cent stake, and they were supported by entrepreneur Iraj Parvizi, whose family interests own 16 per cent. They apparently want to install their own board to take the company to another level.

Superdry fashion company Supergroup rose 7.75p to 332.25p following positive analyst feedback from the launch on Thursday of the spring/summer 2013 range at its flagship Regent Street store. Canaccordâ€™s Wayne Brown has a target price of Â£5 and says the recent collaboration with Timothy Everest provides a clear indication of the positive developments that are taking place.

The bullish tenor of chairman Bob Holtâ€™s AGM address helped Inspired Energy edge up 0.25p to 3.5p.

He reported that the leading UK energy procurement consultant to UK corporates has seen rapid growth in the first five months of 2012, with order book sales at Â£5.2m, up 63 per cent on the same period last year.

Shore Capital says the company is in a strong position for 2013 and the shares remain inexpensive.