CAT's delisting hits Silicon Fen Top 20 hard, but big 3 dominate and deliver
The Silicon Fen Top 20 Index* that we run on this website has taken a big hit. It has slumped from 118.75 at the end of July to around 104 this morning.
The reason is that Cambridge Antibody Technology (CAT.L) was delisted from the London Stock Exchange at the end of July following the successful £700m takeover by AstraZeneca and it has had to be removed too from our Top 20 Index, to be replaced by Celsis International (CEL.L), the rapid microbial detection and analytical services company valued at a more modest £36.53m.
AstraZeneca had offered such a generous premium of 67% that helped take the Top 20 to a heady 129.51 a day before stock markets got a serious case of the wobbles in mid May. This buoyed the Index, somewhat artificially it might be argued, during June and July.
Now it's back to reality with a bump because many of the shares of listed companies in the Cambridge cluster of high tech firms have not regained full health since those May wobbles.
The Big 3
Yet last week Silicon Fen's big three reported half year financial results and have shown they are in rude health.
Arm Holdings (ARM.L), CSR (CSR.L) and Autonomy (AU.L) sit on commanding heights of the Cambridge Cluster and each, not coincidentally, is dominant in their global industry. Each reported robust growth in sales and profits.
• CSR designs and makes single-chip wireless devices, the technology known as Bluetooth. Bluetooth is very common in the mobile phone market, where CSR enjoys a 60% market share, and is now being increasingly used in other devices such as motor vehicles, PCs, stereo headsets and other consumer products, in which market segments CSR holds even larger market shares. It is shipping units at a rate of over 200 million a year, in a growing market.
• Then there is Autonomy, which sells smart search software for unstructured data. This is becoming more and more important for all sorts of enterprises, not least government security and intelligence organisations. Its customer base of more than 16,000 global enterprises reads like a corporate who's who. It so dominates its market that MD Mike Lynch says that in most corporate pitches it makes there is no competition. Theoretical competitors such as Google have concentrated efforts on simple search that doesn't incorporate context, meaning or security.
ARM and CSR are Silicon Fen's two billion pound companies, with their market capitalisation at £1.57 billion and £1.44 billion respectively. Autonomy is valued at a more modest £750 million, yet it has a higher prospective price to earnings ratio - 31.4 - than the other two (ARM at 23.8, CSR at 20.8), suggesting analysts sees more blue sky for the software house.
For once, I'd say the Silicon Fen Top 20 Index, which set out on the 1st of February at 100, is understating its constituent's performance. Given the volatility of high tech stocks and smaller capitalized companies, we expect to see our Top 20 Index wobble about from time to time.
3rd August 2006
*The Index measures the share price movements of the Top 20 companies in the region around Cambridge known as Silicon Fen as measured by market capitalization. (It appears on the left side of the web site, and is regularly updated during the day).
