There is no getting round it, the performance of the AIM market since its inception 18 years ago has been truly terrible. If you had invested £1,000 in AIM at its inception in 1997, your investment would now be worth £750. Yes, that’s a 25% loss over 18 years. However, if you had invested the same £1,000 in the FTSE All Share index, you would be sitting on an 80% return. So why has the performance of AIM been so poor and why does it matter?
As I watch with a mixture of amusement and irritation at how some of the very small and not very exciting companies on AIM are attracting ludicrously high valuations, I am reminded very much of the dotcom bubble. And this is not only because of the valuations – it is also fascinating that a number of the individuals that were at the centre of some of the worst dotcom excess are being welcomed back into public company life. So are these guys visionaries pushing the boundaries or just bull market operators out to get rich?
As regular readers of Megabuyte will know, we have spent quite a bit of time and effort over the last few years looking at how SaaS is developing as a trend. What are the key challenges and opportunities? What is the pace of change? How far will it go? Well, over the next few weeks, the Megabuyte research team will be working on a major update to our views on this important trend and there a number of ways in which our friends in the Megabuyte community can help, of which more in a minute.
I’m depressed. I have been watching the technology sector for nearly 20 years now and I can think of no time, other than the collective madness of the dotcom days, where the smaller end of the London stockmarket has been more dysfunctional. In my view, the latest crop of technology IPOs on AIM represent, at best, poorly understood and overvalued growth stocks and, at worst, the beginning of the end for the AIM market.
As many of our subscribers may know, Megabuyte started life in 2007 as a free blog born in my home office.
Last week Megabuyte Forum hosted a dinner for Telecoms and Networks CEOs and private equity investors ahead of the publication of our latest, 77-page, Insight report into the sector (*). The focus was the business telecoms market, a contradictory market if ever there was one; in revenue decline but with improving profitability, and with a clear mismatch between risk and reward. On the whole, CEOs in this part of the market have more to smile about than their mobile network counterparts.
Margaret Thatcher’s death marks the passing of the instigator of, in the 1980s and early 1990s, very far reaching and innovative changes to the UK telecoms market, that have not only been replicated worldwide but also laid the groundwork for the multitude of independent competitors to BT that we cover today at Megabuyte.com. We look back at that impressive legacy.
Anyone reading the press over the last couple of days would think that Apple and Samsung are struggling whilst Nokia (and RIM) are resurgent in mobile devices. Things may be changing at the margin, but Apple generates 10x more revenue from 19% fewer devices than Nokia, and it still accounts for the majority of smartphone sales by the major US operators. We review latest operator and device manufacturer results; 2012 was a cracker for smartphone sales, but maybe we just now need to be moderating expectations going forward.
To coincide with the publication of Megabuyte’s Data Centre and Hosting annual review, we hosted (forgive the pun!) a dinner for CEOs of several of the leading companies in the sector, as well as investors. With recent share price weakness, commoditisation of data centres was a hot topic for discussion; the consensus is that location location location still matters.
Whilst there has been a flurry of new tablets and mobile operating system announcements recently, commentators seem on the whole disappointed (e.g. with the iPad mini) that progress now seems incremental rather than revolutionary. This really should not come as a surprise given the massive leap forward in mobile and related devices since the launch of the first iPhone in 2007; we will look back at the last five years as the golden period for mobile device progress.
Our latest Megabuyte Forum event last week was well attended, due no doubt to the subject matter of Social Media, which seems to frighten and excite company executives in equal measure. If there was an overriding message from the presentations and discussions, it was that Social Media is here to stay, whether one likes it or not, and companies at worst need to utilise it to protect their reputations, and at best can use it to dramatically enhance their commercial performance. Its use today is probably evolutionary, but its potential is revolutionary.
Megabuyte celebrated its fifth birthday a few weeks ago and I consider that, as a company, we have now reached the end of the beginning. I am incredibly proud of the fact that, almost completely in lock-step with the worst recession in living memory, we have created a business from scratch which can count amongst its customers many of the leading executives, advisers and investors in the UK technology sector.