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| Subject: 4.50 by 2 = 2.25 by 2 = 1.12.5 by 2 = 56.25 by 2 = 28.1225 by 2 = 14.612.25 | |
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Author: Thursday, January 11, 2001 ----Last February 2000 |
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Date Posted: 09:09:07 01/16/03 Thu http://old.smh.com.au/news/0101/11/business/business5.html ERG slips while NSW dithers By Cosima Marriner Deepening uncertainty about the awarding of the smartcard ticketing contract for Sydney's transport system sent shares in prospective tenderer ERG skidding 15 per cent yesterday to its lowest level since November 1999. Its shares slumped 35c to a low of $2.04 as investors lost patience with the endless delays in concluding the $150 million contract which ERG is bidding for in conjunction with Motorola. Almost 10 million ERG shares were traded, with Ord Minnett, UBS Warburg and Salomon Smith Barney the largest net sellers. ERG shares recovered slightly to close down 20c to $2.19, less than half the $4.50 adjusted high it hit last February. One of the leading lights of the Australian technology sector, ERG shares held up well in the face of the sector's downturn following the April tech wreck. But its shares have come under steady pressure since the new year began, amid waning hopes that the smart card ticketing contract for Sydney's transport system would soon be awarded. "The market never likes uncertainty and in ERG's case it has had a long run of uncertainty with regards to the contract," said UBS Warburg analyst Mr David Roberton. ERG shares have fallen 22 per cent in the past fortnight. The market has been awash with rumours regarding the status of the contract, which was due to be decided before Christmas. According to some analysts, Merrill Lynch said at a morning meeting earlier this week that the contract had been postponed indefinitely and the NSW Government was looking at spending its money elsewhere. Merrill Lynch said it did not cover the stock. ERG chief financial officer Mr Ian Allen said last night the company had no reason to believe that this was the case. However, he said an announcement on the Sydney contract was not expected until later this quarter. It is believed that a recommendation for a preferred tenderer went before NSW Transport Minister Mr Scully late last year. But following management changes at the transit authority, the decision has since been sent back for review. Others suggested that the Sydney contract be split between ERG and rival bidder Keycorp/Cubic/Philips/EDS. But as the groups operate different technology platforms that would be difficult to interface, this has been largely discounted. Mr Allen described this suggestion as "absolute nonsense". "We have specifically not been in discussions with the other consortium," he said. As ERG has not won a major smartcard transit ticketing contract in more than a year, continued delays with the decision on the Sydney contract are trying investors' patience with the stock. "It has always been an announcement-driven stock and the market wants some confirmation that there are some contracts in the pipeline," said JP Morgan analyst Mr Michael Willoughby. Investors are also awaiting developments with the long-promised alliances in the banking and telecom sectors, where ERG is hoping to expand its smartcard operations. In the absence of new contracts, ERG's revenue growth is beginning to stagnate. [ Next Thread | Previous Thread | Next Message | Previous Message ] |