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June 7, 2011 12:28 pm

Phoenix IT reiterates faith in the cloud

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Shares in Phoenix IT rose by 13 per cent on Tuesday after the information technology services met full-year expectations and reiterated its faith in the future of cloud computing.

The popular buzzword of “cloud” refers to the storing of digital files on external computer servers and accessing them over the internet.

On Monday, Steve Jobs, Apple chief executive, highlighted the advantages of cloud computing and said that such internet-based services would be a central element in a “post-PC” world in which computers would be pushed to the sidelines.

Although a relatively late convert to cloud computing, Northampton-based Phoenix has increasingly promoted the service, and in April merged its ICM Continuous Business and Servo mid-market services divisions in order to focus more on its cloud operations.

“We are well positioned to take advantage of the market shift towards cloud computing in both of our end-user and partner services divisions,” said Nick Robinson, Phoenix chief executive.

“The breadth of services that we can offer via the merged end-user division leads us to anticipate further growth in managed hosting and cloud services into the current financial year.”

In addition to cloud computing, Phoenix, which operates from 23 locations across the UK, also provides business continuity and disaster recovery services.

“We have seen some confidence returning to the IT services market in the UK with businesses now proceeding with IT projects that had been deferred and many organisations, in both the public and private sectors, continuing to see outsourcing as a key method of reducing their own cost bases,” said Mr Robinson.

“Although current economic conditions and the recent spending review by the government have created a degree of uncertainty, the overall trend for outsourcing remains promising.”

In the 12 months to March 31 revenues rose from £245.8m to £271.6m, while pre-tax profits were almost flat at £25.3m (compared with £25.2m), which the group attributed to its recent acquisitive strategy and capital expenditure on data centres.

Diluted earnings per share edged down from 24.6p to 24.2p and a final dividend of 7p was proposed, bringing the total for the year to 10.5p, up 63 per cent from 6.45p last year. Net debt was cut by £5.5m to £62.4m in the period.

George O’Connor, an analyst at Panmure Gordon, cut his full-year earnings per share estimates slightly from 31.7p to 31.3p, but noted that: “We still believe that Phoenix has a great opportunity in providing cloud services; after all it has the server capacity and the customer foothold, but it has done a poor job of getting this message across.”

Phoenix IT shares rose 28p, or 13.3 per cent, to 238¼p in early London trading on Tuesday.

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