Judging by a recent Morgan Stanley Dean Witter report, Logica must be pleased with last year's £57 million acquisition of Dublin-based Aldiscon, which develops mobile messaging software. The report praises Logica as the analyst's best IT services performer, but says much of the credit goes to Aldiscon.
In the first 11 months since the acquisition, up to last June, Aldiscon contributed £41.1 million sterling (£45 million), or 9 per cent of Logica's total revenue. The report's author, technology analyst William Farrell, also estimates that Aldiscon's lower than average margins (10 per cent as against typical software values of 15 to 20 per cent) mean there is plenty of scope for bigger contributions.
The management team, many of whom became millionaires following the acquisition, remains intact.
Employing 350 people and selling into 55 countries, Aldiscon is expected to continue growing by 50 per cent annually. It recently moved to new offices in the IFSC and announced an additional 250 jobs, but industry insiders are sceptical that many skilled IT staff can be found in Dublin given the shortage.
The report credits the Dublin company with being truly a market leader. It has 230 short messaging systems installed at 130 of the 250 operators worldwide. Selling into a long-term-budget market, the report predicts it can weather the current market turmoil, "barring any major economic downturn". It rates Logica's shares, priced at £15.05 sterling, as a fair valuation.
