Telit: a classic Aim scandal

published 18 August 2017

Telit Communications, a "once-hot internet of things' stock", had the equivalent of a cold shower last week, says ine Quinn and Beth Mellor on Bloomberg.com. The Aim-listed firm lost more than half its market value in days after its CEO Oozi Cats was linked to an old fraud case.

Media reports identified him as US fugitive Uzi Katz, who was indicted in a 1992 wire fraud case in Boston. A few days earlier, Telit, which makes the hardware allowing everyday items to be connected wirelessly, had reported disappointing first-half results.

Telit shares reached an all-time high of 372p in April, and Cats sold £24m of his shares a month later. The stock is now trading a little higher than the 140p shareholders paid at the 2005 flotation. "At first blush, the case has the ingredients of a classic Aim scandal," says Lex in the FT. "One of these is a colourful boss. Mr Cats has potential here." Another requirement is a company active in a hot sector: "Sure enough, Telit supplies components for the much-vaunted internet of things.'" Strong profit growth accompanied by negative cash flow over the past five years was another red light.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

"Keith Hamill has been in more boardrooms than most people have had hot dinners," says Kate Burgess in the FT. Now he is becoming chairman of Premier Foods, the maker of Mr Kipling cakes and Ambrosia custard. "It won't be a cookie cutter job." The firm is weighed down by debt. It snubbed a 65p-a-share approach from US-based McCormick last year, with chief executive Gavin Darby promising investors sales growth of 2% to 4%. Since then, Darby has warned on profits, "blaming everything from the price of butter and cream to currencies and weather". The shares are now around 40p and "shareholders are restless".

"Nothing, it seemed, could shake the loyalty of the Co-op Bank's customers," says Nils Pratley in The Guardian. They stuck around despite lurid tabloid revelations about former chairman Paul Flowers and a series of funding crises. But the endless bad news may now finally be taking its toll: 2% of customers closed their current accounts in the first half of this year. Whether this was due to long-term weariness or competitive action is unclear, but it seems ominous. Once the bank was seen as competition for the big banks. Today, the Co-op Bank has just 95 branches and "is soon to be rebooted with a life-saving £700m capital injection".

"A break-up of the Prudential is a great silly-season favourite," says Alex Brummer in the Daily Mail. But it's not on the cards, even if some think the decision to merge the Pru's heritage life business with M&G to create a £350bn more active fund manager "is a giant step in that direction". This is simply about giving savers, especially those stuck with cash-Isas, more choices and "justifying a £250m spend on a new digital platform". With this move, Prudential is simply emulating rivals such as rivals Standard Life Aberdeen and Aviva.

Alice grew up in Stockholm and studied at the University of the Arts London, where she gained a first-class BA in Journalism. She has written for several publications in Stockholm and London, and joined MoneyWeek in 2017.