Tech firm whose boss is on the run shrinks 5pc
TECH company Telit Communications cut its earnings forecast yesterday, still reeling from the loss of its chief executive over the summer following the revelation that he was on the run from US authorities.
The AIM- listed internet- ofthings specialist saw £13.4m wiped off its market value after ‘narrowing’ its guidance for the year ended December 31 by about 6pc to between £33m and £36m – well short of the £40.5m it made in 2016.
Telit’s shares tanked in August after chief executive Oozi Cats was linked to a string of so-called ‘land-flip’ scams carried out in Boston, Massachusetts, in the early 1990s by an Uzi Katz and Ruth Katz.
Following an internal probe, Telit gave Cats the boot for not disclosing that he had been accused of trying to scam lenders with bogus mortgage applications that overvalued properties.
Yesterday, Telit said it had been reviewing its activities since Cats was replaced by interim boss Yosi Fait. It is trying to cut costs, and could sell parts that do not fit its long-term strategy.
Telit has also been a target of short sellers. As a result, it said it would seek to reassure investors of its financial condition by hiring an independent accounting firm.
Although it said that it was confident it would not breach its loan agreements with creditors, Telit warned that one of its banks had already agreed to waive a banking covenant ‘as a precautionary measure’.
However, it added that it expected to see normal cash generation in the second half of the year, and revenues should come in between £290m and £297m over the year, up from £276m in 2016. But the efforts to placate investors failed, and shares fell 5.4pc, or 10.3p, to 179.8p.
The FTSE 100 had another flat session, rising 0.1pc, or 9.3 points, to 7322.82. A promising start for banking stocks, driven by enthusiasm about US tax reforms, fizzled out during the day’s trading.
Restaurant Group, the struggling owner of Frankie & Benny’s and Garfunkel’s restaurant chains, saw its price target cut by 35p to 265p by analysts at HSBC.
The broker said a turnaround for the group was not going to be quick or easy, arguing that cost pressures and promotional activities such as discount vouchers were slowing progress. Shares fell 2.1pc, or 6.4p, to 297.7p. Spread-betting company CMC
Markets rose after it said profits for the first half of its financial year were likely to be much higher than last year despite a slight drop in clients. However, CMC said it had made up for this by focusing more on experienced traders with more money. It added that it remained cautious about its future as UK regulators crack down on the highly speculative spread-betting industry. Shares rose 2.6pc, or 4p, to 159p.
UK transport firm Stagecoach advanced 2.5pc, or 4.1p, to 168.4p after it said it remained on track despite an estimated 0.4pc decline in regional bus revenues over the 16 weeks ended August 19.
Karen Hubbard, chief executive of Card Factory, pushed its shares up 5.1pc, or 14.2p, to 292.7p by issuing a massive vote of confidence in the face of adversity.
Hubbard increased her stake in Card Factory by nearly £62,000 on Tuesday, just a day after shares collapsed by more than 15pc on the back of a poor set of results. Plastic packaging firm RPC
Group rose 4pc, or 38p, to 978p after reporting that acquisitions and healthy plastic prices were likely to push first-half revenues well ahead of last year.
Recruiter Harvey Nash fell 0.1pc, or 0.1p, to 88p despite a boost in UK financial services recruitment as firms prepare for Brexit.