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Pastimes : Crazy Fools Chasing Stocks w/5-letter Symbols Ending in F
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To: ms.smartest.person who wrote (213)1/30/2001 2:20:47 AM
From: ms.smartest.person   of 307
 
[NWSPF] Sparkle diminishes at NewMedia Spark

AT the beginning of the year, when everything internet was in vogue, internet incubators were one of the hottest stocks in town. An experienced management team would provide funds, advice and infrastructure to get promising business ideas off the ground. But things haven't quite worked out so well.

Yesterday NewMedia Spark, an incubator listed on the Alternative Investment Market, wrote over £45m off the value of its investments because of the savage climate for technology companies. Its shares closed down 4pc at 27.5p, well below this year's high of 180p. Investing in internet incubators is risky, as they deal with new businesses in a market where it is estimated that 80pc of companies will disappear. But for those betting on a revitalised technology sector, NewMedia Spark may prove a shrewder buy than most.

The company has £100m in the bank, yet is only valued by the market at £143m. Trading at little more than your cash balance means you only have to exit successfully from one investment to make the shares look good value. Such extreme valuations are not unusual in this sector, relecting a suspicion that they will not spend wisely. NewMedia Spark at least begins with what is almost universally seen as a strong management team.

The management is also indicating that the first quarter next year will see uplifts in the valuation of its two biggest investments - interactive television channel eTV and music technology company DX3 - probably through new funding rounds.

However, while technology shares remain depressed, so will NewMedia Spark. The company has stated that it will not take its investments to market in the current climate, meaning that the flotation of its online investment platform EO may not go ahead in the first quarter of next year as planned.

telegraph.co.uk
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