Software group WANdisco’s party could be about to start as notable clients join line-up

The investment column that makes the most of your money

SHAREHOLDERS in technology group WANdisco have endured a brutal ride over the past few years. A company of great promise, it has so far failed to deliver on high hopes, there is no profit and the stock has slumped.

But while the shares have plunged close to all-time lows, those hopes are still alive, so the shares could be a buy for those prepared to take a significant risk in the hope of good returns.

The story of WANdisco, which is based in Sheffield and California’s Silicon Valley, goes back to the turn of the millennium. The company’s chief scientist and co-founder, Dr Yeturu Aahlad, has been described by chief executive and co-founder David Richards as ‘a complete genius’ who ‘looks a little bit like Einstein and has a brain about the same size as well’.

WANdisco’s bread-and-butter business is based on software allowing users to work on shared computer files across networks and it has a long list of established clients in this field accounting for the bulk of its revenue.

But the firm offers promise because its technology is crucial to using what is known as ‘big data’. This means helping firms search and analyse the vast amounts of information residing in their databases – technical, customer and sales information – for useful trends or business opportunities. WANdisco’s innovative technology is designed to allow better use of this and to allow pooling of processing power across the separated systems.

The market for this kind of technology has been valued in the billions of dollars. Progress has, however, been slower than hoped for. WANdisco sales reached $14.8million (£9.9million) last year, but it racked up a loss of $37million.

Once a darling for some investors, WANdisco’s shares soared to a peak of more than £15 in 2013 but they have since slumped. Cash ran short in January this year and the group went cap-in-hand to investors looking for a further $25million. Many critics argued that this showed WANdisco was yet another technology money pit that would never come good.

However, this is far from certain. The group has in recent months begun landing some notable contracts. Dunnhumby, Tesco’s consumer data arm, is a customer. British Gas tested the product and has recently begun expanding its use. Three banks have also adopted the products.

In the full-year results announced last month, Richards claimed new contracts were looming and last week comparison website comparethemarket adopted WANdisco to help it analyse the behaviour of its users. A string of other corporations are experimenting with the WANdisco technology.

The sums of money are still too small to put the company into profit, but prospects look better than they have done for quite some time.

Midas Verdict: WANdisco has always been and remains a risky investment. Corporations are battling with an ever-changing technological environment as they try to work out how best to use the data they hold. But WANdisco is still regarded as potentially a serious player in this field. Do not invest more than you can afford to lose and be prepared for a long wait. But at 252½p the shares are a speculative buy for the brave.