There were rumours on Tuesday that software maker Sage Group was planning job cuts. Deutsche Bank, Sage’s house broker, said the company was likely to restructure in the “near-term”. That would make the company more reliant on demand holding in the latter half of 2009, it said.
In contrast to almost all its sector peers, Sage has not announced a big cost savings programme to adapt to slowing licence sales. The company declined to comment.
Deutsche estimated that Sage might be able to cut up to 455 staff, or 3 per cent of its total, at an exceptional cost of £18m.
That would require the group to claw back 60-70 per cent of restructuring costs by the year-end to meet forecasts, Deutsche said. It repeated its “buy” advice.
Sage closed down 1.2 per cent at 171½p, tracking a weak wider market.
The FTSE 100 closed down for only the second day in eight, losing 0.2 per cent or 6.89 points to 3,857.1.
Mining stocks were vulnerable to profit taking after a rebound. ENRC slid 9.3 per cent to 375p and Rio Tinto was down 5.7 per cent to £19.82.
Anglo American lost 3.2 per cent to £11.16. The stock rallied from session lows on news Anglo had sold its remaining 11.3 per cent stake in AngloGold Ashanti to John Paulson’s hedge fund for $1.28bn.
Xstrata outperformed, climbing 1.5 per cent to 395¾p. JPMorgan Cazenove and Deutsche Bank are due on Wednesday to place the rump of Xstrata’s £4.1bn rights issue this morning. The take-up was 99.42 per cent, leaving just 11.3m shares to be sold.
Also among the risers, Tui Travel gained 3.6 per cent to 243¼p on news it was in talks about a strategic partnership with Air Berlin.
“This would satisfy Tui Travel’s dual aim to extricate itself from the loss-making scheduled flying business and right-size its charter fleet,” said Citigroup.
HSBC led the banks higher after saying trading in February was in line with expectations following its strong start to the year. The stock added 4.1 per cent to 460p.
Compass was down 3.6 per cent to 305¼p after Deutsche Bank added the caterer to its “sell” list on valuation grounds. Analyst Geof Collyer said: “We see the group entering a period of unsettling news flow as it battles to compete in the face of global recession.”
SIG was among the sharpest mid-cap fallers on expectations it would today launch a fundraising for more than £300m.
The insulation supplier, down 10.5 per cent to 105p, was thought to have delayed full-year results due yesterday to put together an open offer and share placing at about 95p apiece. SIG ended 2008 with almost £600m of debt, compared with its market capitalisation last night of £143m.
Debenhams fell 10.9 per cent to 41p as uncertainty over its plans to cut debt overshadowed first half results that were better than feared. Management declined to comment on rumours of a stand-off between its large shareholders and lenders over a potential rights issue.
Kesa Electricals, owner of the Darty chain, drifted 0.8 per cent to 98½p after Banque de France data showed household appliance sales dropping 11.3 per cent by value in February.
Aegis, which posts full-year results tomorrow, closed flat at 76¼p even after shareholder Vincent Bolloré talked again of a possible merger with Havas. Separately, Goldman Sachs cut Aegis from its “conviction buy” list on concerns its 2009 outlook and dollar-weighted debt would disappoint.
Investec lost 9 per cent to 210¼p before an operational update on Thursday as more than twice the average turnover changed hands. UBS flagged up the prospect of rising bad debts and writedowns at Investec’s UK and European business, which provides almost a third of operating profit.
Software maker Aveva lost 7.6 per cent to 502p on concerns that a lack of credit financing was sapping demand from shipbuilding and energy customers. “We believe Aveva is now seeing a major slowdown in licences in all major end-markets,” said Evolution, which downgraded to a “sell” stance. “The next 12-18 months are going to be very difficult and this is not yet fully priced in.”
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