Logica Share Discussion Threads

[selborne_edge] 10/6/2009 14:11

rnholl - Once again thank you for your contributions; they were most encouraging and instructive.
I was employed in Logica when Martin Read arrived and soon afterwards the share price started to rise very rapidly. Of course this level of success was attributed to the CEO but on reflection this apparent success disguised many structural weaknesses. Hopefully these management weaknesses, particularly those concerned with poor cost control, have now been overcome.

[rogsim] 10/6/2009 13:41

rnholl

Many thanks for your contributions. It is good to read insightful and informative posts.

[rnholl] 10/6/2009 13:00

Yes - I do know them well!

I think it is also important to recognise that the IT business is not the flash, technology based affair it was 5-10 years ago. It is in places now much more like a utility. It is about building a long-term stable and focussed business. Clients want well run, unsensational basic services ... with an 'overlay' of sharp but business relevant IT developments.

Most investors are still in the .com bubble frame of mind - looking for quick wins! I would not expect any sensible behaviour from them. I also doubt if there are more than a handful of people in the city who would understand this new market.

Another long term factor is to recognise that much of the 'growth' of these IT companies in the past 5-7 years has ACTUALLY been a 'transfer' of staff and assets from clients via "oustsourcing". They then spent most of the intervening years struggling to sort out basics, infrastructuire and updating technologly to the current generation of MicroSoft platforms. This added little real value to clients and there is not much more of that sort of 'growth' left. They now have to consolidate and start developing real long term service/value models with their client base.

This is what Andy Green is trying to bring about.

The ones that get that right will end up in long term profitable contracts. Client loyalty and margins are the key. Logica now has a revenue stream of some £3 billion that is by and large not going to go away in the short term. If they follow the Andy Green strategy then the profits are there over 2-3 years. He has made it clear that there will be no more stupid takeovers in the short term. His message is make what we currently have work properly.

It is not exciting but it is right.

Another interesting thing that I note from the figures. When Read was there, the power resided entirely with his Gestapo in London. However, I note that Scandinavia and France now contribute 60% of the business. My contacts also tell me that the power in the last year or so has moved dramatically away from the UK and is being heavily influenced by the Swedes - and the VMData way of doing business was a good and succesful one. The dinosaurs are being sidelined fast! It also gives them some real hedging against the potential difficulties in the UK in the next few years ... thanks to CLUNKER Brown. ("I regret that the Iceberg hit my ship while I was on the bridge ...)

For those that are interested, I have recently retired which is why I have time to write these tomes!!

[selborne_edge] 10/6/2009 12:12

rnholl - Thanks for your contribution. You obviously have a deep knowledge of Logica and I sincerely hope that your analysis proves to be correct. Conversely the performance of the share price since the 'dotcom boom' has been most disapointing. It is an act of faith to stick with Logica but as old habits die hard, I too will hang on.

[a0502162] 10/6/2009 11:47

It doesn't really matter whether or not he is saviour, the share price price is low other shares in the sector have risen some 10-20% or there abouts. Low price, to me signals a buy as long as you stay within the limits of a projected rise. Simple really..................just don't be greedy.

[robwt] 10/6/2009 11:20

I take on board what you say, but the stockmarket invest with the future in mind. In this recent rising market, Logica has underperformed the sector by 22%. That doesn't give me much hope.

I see they got an upgrade yesterday so maybe we will see the share price rise, it certainly needs to. IT should be a flyer in these times, just about every sector need up to the minute IT. Yet Logica seem to be lumbering along stuck in the same rut as they have been for years. Andy Green and his management have failed to make a difference, Andy Green's time at BT has now turned out to be another failure so why should this overated ex BT loser be Logica's saviour.

[a0502162] 10/6/2009 10:37

Why not do it short term?

[rnholl] 10/6/2009 08:54

What has any of this to do with Logica???? Can I suggest you start another thread on 'Greed and Lack of Foresight'?

Despite all the rants above, I know Logica well and it is financially ruthless and very good at certain things. It will always cut back hard to keep profitable. It is brilliant (probably among the best in the world) at building large scale mission critical software (messaging, finacial clearing, sattelite control, etc).

The biggest issue is the huge shift over recent years into Services (i.e outsourcing, managed IT, etc.) where it has had to learn a lot of very tough lessons ... and come to terms with the fact that brilliance in s/w development does not necessarily transfer to Service Provision.

This move to Service Provision has also exposed the 'silo' structure of the company - which was fine for software development but a real problem when trying to deliver seamless service across internal and international boundaries.

I agree that Read and his cronies broke the company. They never saw the changes coming and there was never any strategic thinking at all. At every level it was "DECALRE A PROFIT .... OR WE WILL FIND SOMEONE THAT CAN". it was a classic example of 'going bust profitably!! However, the residual ruthless financial control legacy can now be used as an asset in tough times.

Andy Green has got it right. He is gradually tackling both issues but it is a 3-5 year journey. I think the results they produced last year were hugely creditable under the circumstances. In the long run they will do well.

The only threat on the horizon is one of 'scale'. If they adopt a strategy of bidding for everything that moves, they will suffer from the size advantage of competitors; this will eventually force a merger, fire-sale or takeover. However, if they start to segment their market properly and develop specialist expertise, the future is bright. I am afraid I have no visibility of this and would welcome any views.

I am sticking with them long-term.

[a0502162] 10/6/2009 08:20

Well one thing for sure is that every "empire", democratic or otherwise, comes to end at some point in time. If you look at the debt the US has then it is in effect bankrupt only relying on consumer spending. If they stop spending altogether then it would definitely be the end, which has almost happened.
When you look at the fact the bulk of the debt is held by China then the US can't say or do alot against what ever China wants to do in the future.
So the next "empire will be that of China/Asia and it won't be too long in coming, being as the US amongst others are wanting stronger trade links with China, perhaps they can se it coming to.......that would be a first!

[robwt] 09/6/2009 17:38

A0; Sure, predatory lending to anyone with a pulse. It started in the USA and then we in the UK jumped on the bandwagon. All made easier by New Labours lack of regulation.

The people with no money, plus the people with some money all thought they were rich. They were all buying houses, cars, boats and living well beyond their means as long as the plastic lasted. Nah more Boom and Bust said that big Scottish Buffoon and they all believed the idiot. If the shilling hasn't dropped yet, most companies in the FTSE 350 were raking it in, the UK was raking it in.

Hornby was just one of those who were carried on a gigantic wave of profligacy. A trained chimp could have done the same, not much merit in that is there.

[a0502162] 09/6/2009 17:15

I think you might also WANT TO CONCIDER that if the US hadn't started loaning money for homes (sub prime)to people who couldn't even understand that someday they will have to pay it back then the UK and other world banks might have got away unscathed.

[mralliantie] 09/6/2009 16:58

Logica Wins Airbus Outsourcing Deal Worth Over GBP10 Million Source

June 09, 2009

LONDON -(Dow Jones)- Anglo-Dutch computer services company Logica PLC (LOG.LN) has won a three-year outsourcing deal worth over GBP10 million to manage Airbus' IT applications including document management, sharing and archiving, a source familiar with the matter told Dow Jones Newswires Tuesday.

The contract with the European aircraft manufacturer, which is owned by European Aeronautic Defence & Space Co. NV (EAD.FR), will be based around Logica's blended delivery model which uses part European and part offshore-based services to reduce costs but maintain a local presence.

The services will be split between Hamburg, Toulouse and Logica's Chennai, India center.

Around a quarter of the contract will take over outsourcing duties from Deutsche Telekom AG's (DT) T-Systems.

Logica's Airbus deal follows two recent contract wins of similar size; a five- year deal with Ford Motor Co. (F) announced earlier this month which is understood to be worth just short of GBP10 million, and one with Finnair Oyj ( FIA1S.HE) announced in May worth slightly less than the Airbus deal.

Logica competes with European peers Capgemini (CGEMY) and Atos Origin (ATO.FR) to manage the IT systems of companies across its European footprint, utilizing staff in cheaper offshore countries such as India and Morrocco to drive down costs while maintaining a presence in its main European markets.

It said in April it expects first half revenue to be slightly down on last year as consulting and professional services demand falters, and market conditions in the second half will likely remain the same.

The company reports first half results August 7.

[a0502162] 09/6/2009 15:40

exactly, boots now is just a retailer.

[grahamburn] 09/6/2009 15:32

Gosh. No idea my brief comment would cause such a furore - and I was only really pointing towards an article by the Business Editor of The Times and making a general point about the negativity and jealousy that abounds in the UK!

And the responses do rather prove the point about the UK and enterprise. Yes fair comment robwt, Hornby probably would never risk his own money in a business like many others, but why the vitriol: he fessed up to mistakes and wants to move on - or back to his real expertise. Nothing wrong with that. And, as The Times pointed out, ALL his bonus winnings from his time at HBOS went into HBOS shares. Lost quite a lot there, hasn't he!!

There you go.

But it does show the level of expertise of the bulk of BB posters.

Finally, try buying shares in Alliance Boots: see if you can. Think you'll find it was taken private a few years back!

[a0502162] 09/6/2009 15:30

I think you might find that Boots has already been partly sold off at the hands of Nigel Rudd, ie it's drugs company!!

[robwt] 09/6/2009 14:27

grahamburn; Take off the rose tinted spectacles and start to live in the real World. Hornby is no Captain of Industry, he is a lottery winner. Not once did he win the lottery but several times, he has now been saved by the Boots board. Boots, that once great store of the High Street that still lives in the 80s. Mark my words, Boots will either be split up or will end up like Woolworths.

There is plenty of proper talent in the marketplace who should be given the chance and you are spouting off about the also-ran Andy Hornby. grahamburn, how many of these guys have ever used their own money to start an enterprise. None, because they would die if they didn't have shareholders funds to grab all the time.

There are some good CEOs and managers, but take my word, Andy Hornby ain't one of them and never will be.

I don't care what anyone thinks, I won't be buying Boots shares or for that matter anything from them.

[cbbr16] 09/6/2009 14:19

BROKER CALL Logica upgraded to outperform at Seymour Pierce
9 June, 2009 10:42:14 AM

Broker upgrades Logica to outperform from sell, with a target price of 90p as the shares have underperformed the market by 22% over the past 12 months.

"The stock also trades at a significant discount (56%) to the broader IT Services peer group and we argue there is room for a re-rating over the medium term."

[a0502162] 09/6/2009 12:20

At last..........someone who knows what he is talking about. Although I don't quite know where Madoff fits in with the argument.

Of course the otherside of the argument is that we all create our own luck, and common sence should tell us that borrowing more than we can repay will end up in disaster....................but thounsands did....................and now they want to blame anyone and everyone for their own mistakes.

[robwt] 09/6/2009 09:50

Dr Martin Read now works as an advisor to Seimens. With his track record for losing money he must have got the job for favours past. Read owes us all money, he and his cronies should be in prison.

Did you see that the failed Andy Hornby, the guy who headed HBOS just walked into a gold plated position at Boots. I won't be buying anything else from Boots and nor will any of my family. I hope others who has been affected by the Great High St Bank Robbery steer clear of Boots the Chemist. Seems like Boots headaches are about to begin.

Superdrug from now on, they are cheaper anyway.

The UK is full of Z listers and no hopers holding top jobs. Politics, Banks, Industry, Retail, Telecoms. The best Boots can do is hire Andy Hornby a baby faced little legend in his own mind. I reckon they should have a clear out of the whole board of that company.

They think we all came up on the last banana boat.

[selborne_edge] 08/6/2009 20:27

Martin Read arrived in Logica just before the start of the dotcom boom. He took credit for the phenominal rise in the share price and the assumption was that our great leader walked on water. It was of course a total illusion and we have had ample time to appreciate just how wrong we were.

[robwt] 08/6/2009 13:59

Selborne; I remember when Logica were flying. It was back in the Dotcom boom and of course the valuation was as fake as Martin Read's business acumen. It was all part of the loonies running the asylum. We have had the same in the property market, the banking industry and the political system.

A whole bunch of morons running things.