Misys falls 4% on rival's warning, while Arm drops on Sony Ericsson losses

Technology shares have come under pressure on continuing worries about demand.

Misys - the IT group currently subject to a bid from Fidelity National Information Services - has fallen 16.5p to 370.9p after a profit warning overnight from rival Temenos. Traders have been nervous about Misys for a while, awaiting further details on the bid and deciding no news could be bad news. George O'Connor at Panmure Gordon said:

We expect Misys shares to come under further pressure today in the wake of the Temenos profit warning last night. While customer base overlap is limited, the pair will compete on each new core banking bid. Misys shares have been weak, as investors fret that the deal with FIS will be scuppered by current capital market uncertainties and FIS less keen on add to its $5bn debt. In truth, the lack of news simply means no news – however, fear has overtaken greed and hot money will continue to come out of Misys. Expect FIS to be whooping it up today – it will see Misys as a strategic asset and now has the opportunity to pick it up for less. We reduce our target price to 398p from 415p, as we reduce our takeover premium from 25% to 20%. Retain hold.

Arm has fallen 14.5p to 560p after mobile handset maker Sony Ericsson - one of the chip designer's customers - revealed a three month net loss, while Autonomy is off 59p to £16.61 ahead of second quarter results due at the end of July. Paul Morland at Peel Hunt - not a fan of Autonomy, it is fair to say - has just issued a sell note on the business:

The shares have rallied by around 15% during the last three months, broadly equating to the accretion from the Iron
Mountain deal anticipated in 2012. This means that the shares have sustained their high rating when we would have expected some decline to reflect deal risk.

We would argue that a company that does not appear to generate organic growth cannot justify trading on 18 times a 2012 earnings per share forecast that has just been boosted 15% by an acquisition.

• Misys
• ARM
• Autonomy

Nick Fletcher

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Ryan Gallagher 15 Jul, 2011

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Source: http://www.guardian.co.uk/business/marketforceslive/2011/jul/15/misys-falls-on-rival-warning
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