Telecom Plus is a "high-growth enterprise" with "an identity problem", says Stella Shamoon in The Times. Its shares are listed in the telecoms sector, but it actually provides integrated low-cost utilities (electricity and gas, and mobile, fixed and internet telephony services) to domestic households. So it's not a telecoms firm, but as it doesn't own the infrastructure to supply, it can't be classed as a utility either.
But none of this takes away from the basic strength of the business. By piggy-backing on the likes of BT and British Gas, Telecom Plus can offer low-cost utilities without risk in terms of technical back-up, such as repairs of gas leaks or faults on telephone lines. The most compelling aspect of the business is how cheaply it acquires new customers. Sales are made by "an army" of 10,000 freelance distributors' who get commission when they recruit friends, colleagues and neighbours to the 150,000-plus customer base. These recommendations are persuasive - the new intake of 7,000 to 8,000 a month "tends to stick". If Telecom Plus can maintain this growth momentum without any service glitches, its business should grow at least fourfold within seven months. Meanwhile, its distributor numbers are growing at a rate of 400 a month.
Turnover at Telecom Plus soared 78% to £58m last year, pre-tax profits were 38.5% higher at nearly £5.6m and the final dividend was increased by 30%. This year's results should beat expectations, with the firm already pledging to pay an interim dividend of 4.5p, up 80% on last year. This is affordable, given it has cash of around £7.5m and strong cash flow. And while the business has plenty of competition, it is rarely of the same integrated variety. Even if copy cats were to enter the field, Telecom Plus has an impressive first-mover advantage. Its state-of-the-art technology in billing customers and its distribution network would be very hard to replicate. All this makes the shares look attractive. It's probably worth buying into both its shares and itsutility services.
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Is this the safest long-term bet on technology?
David Norwood "is at it again", says Richard Fletcher in The Sunday Telegraph. Norwood - the entrepreneur and chess grand master who shot to fame at the height of the dotcom bubble when he sold his internet advisory business, IndexIT, to brokers Beeson Gregory for £34m just seven months after founding it - thinks he has found the next big thing.
The idea is simple, says Liz Vaughan-Adams in The Independent. Norwood has set up a firm called IP2IPO (intellectual property to initial public offering) to commercialise the intellectual property developed in universities, mainly in the life sciences arena. So far, he has struck 15 to 25-year deals with the likes of Oxford University, the University of Southampton, King's College London and the University of York in the hope that they will provide ideas that IP2IPO will then commercialise for them. The plan is to raise £25m of new money through floatation on Aim later this month to value IP2IPO at £100m, at which stage Evolution (which bought Beeson Gregory two years ago and currently owns 75% of IP2IPO) will reduce its holding to below 50%. None of the other shareholders are selling any shares. Norwood himself has invested £1m for a 1% stake in the company and is planning to run "an incredibly tight ship" consisting of a ten-person staff and a cost base of £100,000 a month.
So will it work? Well, there are already some promising deals on the table, says Christine Sieb in The Times. For example, Southampton's School of Oceanography spent 20 years developing technology that detects oil in deep-sea waters and, since the deal with IP2IPO, has signed contracts with two big companies. But we've been here before, says Richard Fletcher. Remember Generics and Scipher?They both hoped to do something similar, but Generics' shares have fallen 97% since March 2001, and early this year Scipher was forced into a discounted rights issue after a change of strategy. So what is to stop IP2IPO going the same way, apart from its "maddening" name? The answer may be Norwood, who says he has it all sussed. The firm will only be involved at the early stages of fund raising for new ideas, which means that even if not a single idea comes to anything over the next 25 years, it will have enough capital to survive. "There will be a lot of volatility," says Norwood. But you will still be buying into "the safest long-term bet you can ever have on technology".
Don't lose patience with Dana: it may blossom yeYou don't buy companies like Dana Petroleum on the basis of current profits, says the Investors Chronicle, but "for the dream of finding an oil reservoir".Sadly, at Dana that dream has been elusive for a while. However, that's not to say there aren't good prospects out there. The oil company has extensive positions off the coasts of Mauritania, Kenya and Ghana, as well as exploration acreage in the North Sea, Indonesia and Australia. It will drill at least three exploration wells off West Africa over the next 18 months and appraisal drilling in Indonesia will soon start too. Dana has also expanded its North Sea interests. In the meantime, its profits and cash flow offer some "comfort". Pre-tax profits of £13.8m on £37m of turnover are expected for 2003.
But despite this relatively healthy outlook, Dana's shares insist on trading sideways, says Edmond Jackson in The Sunday Telegraph. This isn't fair: Dana deserves more recognition for its achievements. In developing North Sea assets, it boosted profits in the first half to more than the total for 2002. Production continues to grow and, at 231p, the shares trade on a prospective p/e ratio of eight, a sector low. While patience is needed with some of the big projects, Dana does have a positive exploration record overall, something that its share price ignores. It is a radically stronger company than three years ago, with at least treble the earning power and the support of "a flow of significant contracts". It would be "foolish" to lose patience now, especially as Dana is owed some "good fortune". You never know when smaller oil and gas companies might strike it big. As a long-term investment, Dana continues to merit a place in any portfolio.
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