Last month, I wrote that the jury was out on Pearson, the media conglomerate that owns the Financial Times, among much else. City apprehension was largely attached to what life for Pearson was likely to deliver in the wake of the sale of its stake in BSkyB – and the shares hung loose as we awaited some news of acquisitions strategy.
Some of the answer came last week and it was by no means bad for Pearson’s shareholders. The quote moved ahead some 12p last week, before settling back on profit-taking to end the week 5p higher at 602p.
This was partly due to renewed confidence in Pearson’s acquisitions strategy and partly because of renewed bullishness about the company’s prospects in the Christmas computer games market.
Pearson paid a very full 310m last year for video games cartridge and CD-Rom concern Software Toolworks – subsequently renamed Mindscape. Disappointing initial profits followed and the City started to take evasive action – the more so when the BSkyB placing was announced.
But Sony’s new hardware product, PlayStation, has presaged something of an examination of this goldmine market and Mindscape’s position does not look too bad. Mindscape has more than 12 per cent of the CD-Rom publishing market and is now thought to be well-placed to take on Sony and Nintendo this Christmas. We shall see.
If Pearson is returning to the City’s favours, then there seems to have been something of an end to the City’s honeymoon with cable stocks. This had something to do with profit-taking – TeleWest, for example, had outperformed the market by some 14 per cent from its flotation until the week before last – but was also to do with more fundamental concerns about the future of the market.
The vaunted deal between BT and the Labour Party to release the privatised telecoms giant from its regulatory trusses is taken seriously in the City – as is much about today’s Labour Party. A liberated BT, providing a national cable infrastructure, would make life for cable franchisees considerably less comfy.
Thus TeleWest’s shares plummeted eight per cent to less than 170p; General Cable fell 8p to 194p and Nynex CableComms lost 8p to close at 127p.
Elsewhere, the renaissance of advertising conglomerate WPP continued as it gained 3p to 148p after a large block of shares, which had been looking for a home for some time, was finally placed. The shares have a long way to go to re-live the old days, but at least there are buyers to be found.