Psource Share Discussion Threads

[sper] 17/10/2003 10:17

Interesting thought. There has been a substantial upturn in M&A activity in recruitment in the last 3-4 months, including I think one online recruiter moving into offline. There are 7000 or so recruiters in the Uk, it is a highly fragmented industry and consolidation will be a key play for anyone wanting to maximise competitive advantage.

PSD IMO would be a good target but all speculative at the mo, lets wait and see what happens

[irresponsible] 17/10/2003 09:43

I can't really see why there have been so many big buys of PSD lately. I've nothing against them, but nearly all the others seem better value. I wonder if some consolidation involving PSD is about to happen...

[irresponsible] 09/10/2003 08:58

Interesting debate.
As I see it, companies prefer to outsource their non-key tasks.
These usually include catering, IT and recruitment.
If a company has its own recruitment manager surfing the net, placing adverts, filtering applications etc, this person is likely to be paid £30,000+, will need a pension, holidays, perhaps a secretary and assistant. And at the end of the day, if the in-house person isn't much good, you are stuck with them. If you are unhappy with an external agency, you just go elsewhere. You know what you are paying and you only pay for results.
Consequently, outsourcing is here to stay.
I don't know if PSD are any good, but money talks and they have plenty of it.

[sper] 09/10/2003 08:29

nlm

fairish comment and you should know better than most about psd shares but as director of an unlisted recruiter (that has increased t/o year on year) I do know that major firms are not stopping their use of recruiters. The market is changing and they are being much more aggressive about fees and quality (but then they should be) but at the end of the day a professional recruiter can provide a service that adds significant value to a company in many ways and at a lower risk than otherwise. Secondly, even ignoring the quality and value added a recruiter can provide they do have access to candidates that a HR dept would not have access to and in the case of senior positions, would not even be able to approach.

So thanks for your comments but I do not agree about the industry but will be cautious in doing my research on psd

regards

sper

[nlm1] 09/10/2003 00:25

Sper,

I was a Director at PSD - it's probably best if I don't identify myself too much more.

I know that what I say won't make any difference but I'll say it anyway. Do not invest in PSD shares. Come to think of it, do not invest in any standard recruitment agency.

All these agencies have lost their core and biggest clients. All the blue chips now do virtually all their own recruitment work, they just don't use agencies anymore. This is catastrophic for firms like PSD. I left because the writing was on the wall big time. There is a huge misconception that the recruitment agencies have suffered massively as a result of the downturn, and therefore, as you point out, cyclically they are poised to rise again. Sounds nice in theory but actually not true. 1. the economy didn't dip as badly as people thought 2. As a result over the last 3 years plenty of recruitment has continued ( is unemployment higher or lower than 3 years ago - exactly!) So if the economy didn't really tank why have the agencies all died a death? Go and look at any internet job board and you'll see why. £250 for an advert compared with a £10,000 fee from an agency - not a hard decision to make for an HR Director to make!

If you really want to know the future prospects of recruitment agencies go and ask an HR Director of any listed company how much they are planning on using agencies in the future. After that, you won't buy the shares.

Please take this in the spirit it's intended. Of course it's your decision, but you may want to follow the director buying over the last 6 months at PSD.
Absolutely ZIP!!!

[jeffian] 08/10/2003 16:02

Hi sper,

No interest in the sector other than as an investor.

I have a terror of huge PER's. The problem is that, however strong the profit growth/recovery, the day the market decides they have gone ex-growth and applies more 'normal' PER, the price simply cannot be sustained however strong the earnings growth. Capita was a case in point for me; stonking earnings growth still being delivered but at one stage it had a PER of several hundred(!) so of course it has gone backwards and then stood still ever since while earnings catch up. PSD's earnings per share peaked in 2001 at 57.8p when the shares were just off their best at something over £10 which was a sensible-ish PER of 17. On that basis, it seems to me that the market is already pricing in earnings of around 14p which must be for the year to 2005 as they have already said there will be no recovery this year, which is a bit hot for me.

I do like this company so keep posting 'from the coalface' to convince us all that the pick-up is here. In the meantime, to coin a cliche, I'm going to go on watching that light in case it is the proverbial approaching train!

Regards, Ian

[sper] 08/10/2003 15:38

Jeffian

Disagreed only in so far as I read your comment to mean people are looking for a light when there probably isnt one.

IMHO the sector is going to lift, whether that is sustainable depends on management delivering cost control/effective stewardship and on the market delivering demand!

I am also uncertain about whether to buy in now. Hindsight says 3-4 months ago would have been very nice but the pe's are a little bigger now and I fear that they wont so much as drop but dive if expectations are not met.

Have you got an interest in rec sector beyond investing?

Regards

[jeffian] 08/10/2003 09:54

sper,

When you say you 'disagree' with me, surely you mean 'agree'! This is a well-regarded company in a cyclical business which many will wish to invest in as soon as there is evidence of a pick-up in activity levels which, because of the way these companies are structured, will feed through quickly into the bottom line. Your view that the pick-up has arrived is supported by Michael Page's trading statement yesterday and reflected in share price rises across the sector including PSD, Robert Walters, Harvey Nash and Spring Group. My only reservation is one of timing; the Page trading statment 'beats expectations' only in the sense that the decline has stopped and turnover is flat. Since PSD's shares have doubled since February and currently trade on a historical 2002 PE ratio of 109 (2003 interims worsened to a loss of 2.8p per share accompanied by statement "• Activity levels now stabilised although no increase in trading expected during remainder of this year") then some of this recovery is clearly already in the price.

On the back of the 'Year 2000' employment bonanza, I rode this share from £3something to nearly £12 before and hope to do so again at some stage. Personally, I would rather miss the first part of a share price recovery than dive in too early and find it is a 'false dawn' but, other than this issue of timing, we are in agreement I think!

Regards, Ian

[jeffian] 07/10/2003 13:49

I took it to be a reaction to the Michael Page trading statement out today saying that results would beat expectations. Trouble is, those expectations are pretty low! In the employment sector, everyone's looking for a glimmer of light at the end of the tunnel to pile back in. PSD is one of the sounder companies in the sector with cash in the bank, but at this price someone's already anticipating a substantial rise in earnings which doesn't quite look in the bag, yet.

Regards, ian

[irresponsible] 07/10/2003 12:47

Massive buys going through for PSD.
Perhaps someone else is buying them!

[irresponsible] 21/7/2003 16:27

Interesting surge in activity with Lorien shares - you could well be just right.

[sper] 16/7/2003 15:39

PSD to buy Lorien, they have £20m+ and Lorien market cap is £9m for a £111m to business, well it was £111m last year!!!

[irresponsible] 16/7/2003 11:50

Bit of a surprise that Lorien are still struggling. Clearly there will be winners and losers. Having cash on your balance sheet makes it easier to be a winner, though.

[sper] 16/7/2003 08:33

Interesting thoughts and certainly carry some weight on the back of gains for Hays, Michael Page, Rob Walters, constellation etc.

Things are definitely on the up in recruitment, albeit slowly and perhaps this is a sign of market confidence, however 20% increase in two days with a PE of 105 is a lot swallow particularly when GP has declined so rapidly. Given their very strong balance sheet is it likely that rather than being takeover fodder there is something in the offing to strengthen their portfolio.

?????

[irresponsible] 16/7/2003 08:31

Looks like you are probably right - Imprint just reported and seem to be saying that things are picking up nicely.

[irresponsible] 16/7/2003 00:41

Must be a takeover target I reckon.
But I cann't see anyone paying much over the current share price, so too late for me to buy some. Maybe Spring?

[jeffian] 15/7/2003 15:22

I don't think so, necessarily. Interesting one, this; it goes up, it goes down (both bigtime) and nobody but nobody comments on it. It was one of my great successes in the run-up to 'Year 2000' (remember all those airliners that were supposed to crash when the computers ticked over?) - bought round £3 and sold around £12 - but also got it wrong when I bought back in at £6 and it went on down! Luckily ended up on the plus side! Anyway, my reading of this is that it is one of those stocks which pre-empts the recovery. OK, so recruitment in the Professional, Banking and IT sector is shot to pieces but what this movement off the bottom tells me is that someone has detected a pick-up, or potential pick-up, in the recruitment market. PSD has a well-regarded management team and has nurtured cash in the bank. If the recent 'bounce' is an indicator, it could have a lot further to go - but I doubt you'll read about it in the papers, whatever happens!

Regards, Ian

[sper] 15/7/2003 08:25

20p increase in share price yesterday and buying starting early this morning with no news in the market - anyone know why?

[sper] 18/6/2003 17:17

A long crawl ahead particularly in the run up to mid year interims but the IT staffing market is showing gradual signs of improving demand (at least a reduction in the rate of decline) on temp/contract and perm fronts.

This is possibly supported by up turns in Hays, Page, Capita et al today following Hays more bouyant trading update.

Could be that interims will show first half profit and cash positive. One to buy for the long term

[nlm1] 08/5/2003 19:53

Anyone who invest in PSD is nuts. Absolutely insane. Come to think of it, anyone investing in a standard recruitment company is nuts.

I used to work at PSD. All their and other recruitment companies major clients can now find people for themselves using the internet. they don't need recruitment companies anymore. They are about as much use as Betamax.

[strudwick] 23/4/2003 15:43

a few days ago RWA and PSD looked very similar. RWA has rocketed leaving this looking cheap by comparison.

[jazza] 24/2/2003 08:40

The contractor to my right is not being renewed, he finishes on March 21st.


He spends much (too much!) time on the phone ringing agencies and old mates
in the contracting game. Same story every time - more contractors laid off, agencies inundated with CV's (he says one agency has 400 CVs but zero jobs).

We've also just started to cut back on middle-management, 10-15% of positions are going - we're just too top-heavy.

Alluding to Holway's report above, we're still in stage 2 as I see it.



Interestingly, Alliance & Leicester reckon a euro conversion project will cost more than Y2K. Come on Blair, join the euro and save the IT sector.

[nlm1] 21/2/2003 11:11

what full year losses? details please!