As the Tory confrontation continued to sap stock market confidence attention switched to BICC the cables and construction group which to the surprise of

As the Tory confrontation continued to sap stock market confidence, attention switched to BICC, the cables and construction group which to the surprise of many is said to be about to indulge in a series of meetings with stockbroker analysts. Few expect good news and BICC shares fell 14p to 294p, close to their year’s low.
At the moment the stock market is looking for BICC to achieve an advance from pounds 126m to around pounds 155m this year.But there is a sneaking suspicion the signalled round of meetings will be used to pull market forecasts lower, perhaps to around pounds 140m.There is no secret that BICC faces a multitude of problems. It is also backing one of two standards for a new compact disc technology, and is an important manufacturer of video cassette recorders, televisions and other home entertaiment equipment.While its investment in Virtuality is small, the link provides Philips with a window on the virtual games sector, and fits the company’s strategy of developing several technology strands simultaneously.Virtuality’s chairman, Derek Payne, welcomed the Philips investment, saying it represented a vote of confidence in the company’s future.. Atari agreed earlier this year to pay advance royalties on Virtuality games and software for use on Atari’s multimedia entertainment system. The games company had already agreed to help fund the development of Virtuality’s trademark “head-mounted display”, a helmet to be worn by users of Atari’s Jaguar video game console.Philips has recently stepped up investment in CD-ROM technology, launching a self-standing multimedia operation to develop games and information products. But analysts expect the company to go into profit this year, on the strength of contracts signed with IBM, Sega and Atari and the anticipated upturn in the market for games and games software.The two licensing contracts provide up-front development money worth about pounds 1m to Virtuality. Virtuality welcomed the investment, saying it would be “beneficial to both companies”.A leading developer of equipment used in so-called “virtual reality” entertainment applications, Virtuality is still losing money, reporting a loss last year of pounds 1.4m on turnover of pounds 9.1m.

The placing will net Virtuality about pounds 2.4m, to be used to bolster working capital.Philips joins two other significant shareholders, IBM and Motorola, the electronics company. MATHEW HORSMAN

The high-tech start-up company Virtuality Group gained a new shareholder yesterday, with the announcement that the Dutch electronics giant Philips has taken a near-5 per cent interest.
Electris Finance of Luxembourg, a Philips subsidiary, has agreed to buy 1.3 million shares through a share placing at 192.3p each. With a net asset value estimated at 153p, that puts the underlying discount back at around 13 per cent and suggests the proposals are worth backing.. The brokers Credit Lyonnais Laing estimate the warrants could be worth about 13-14p a share. By contrast, the Asia trust will initially continue with a defensive strategy that has proved its worth over the past 18 months in the light of the problems in Mexico.Shareholders are being offered a share in each new trust on a one-for- one basis with their existing holding in Drayton Far Eastern, with warrants on top.

The strategy of the new Tokyo trust will be to seek out undervalued, large-capitalisation stocks in a market Invesco thinks is looking fairly valued. That stems from the clear differences between the sophistication of the Japanese market and the rest of Asia. From a typical level of about 12 or 13 per cent, the discount has more than halved to around 5 per cent on a share price down 0.75p at 145.75p yesterday.The managers have plainly struck a chord with shareholders who increasingly want to focus their portfolios on particular geographical areas. Such a move may prove not to be in their best interests, however.Invesco’s plans, first mooted last year, have already achieved their intended effect of cutting the discount to net assets on the hitherto poorly-performing Drayton Far Eastern. Assuming a liquidator is appointed at a further meeting on 10 July, the assets of the old Drayton Far Eastern will be transferred to the new Invesco Tokyo Trust and the Invesco Asia Trust.
Shareholders still have a last chance to throw a spanner into Invesco’s plans if they choose to exercise an obscure right under liquidation legislation to demand cash rather than shares in the new trusts.

At an extraordinary meeting, shareholders voted overwhelmingly in favour of the proposals by the managers, Invesco, to split the trust in two, forming a Japan fund and a fund investing in Asia outside Japan. The expected shareholder rebellion against proposals to reconstruct the old Drayton Far Eastern investment trust fizzled out on Tuesday. A hodge-podge of television assets, along with the recently purchased games maker Mindscape, do not suggest a coherent strategy.More to the point, if current trading conditions really are under pressure, the market may want to rethink the premium it is awarding the shares, even after yesterday’s drop.. As well as the independent television production companies, Thames and Grundy Worldwide, investments have included a move in Asia, a joint venture with the BBC to operate a cable channel, UK Gold, and two recently launched satellite services in Europe.Investors may be right to be wary of these moves. Pearson has made recent, and some say expensive, moves into broadcast, as part of its moves to reposition itself. According to some observers, current trading in the sector is weak, and there are worries that results for the second half of the year will be insufficient to offset a disappointing year to date.That said, traditionally results can vary wildly between the first and second halves, depending on whether book publishers have produced best- sellers or non-starters.The television sector may also be causing some problems.

From about 640p earlier this month, the shares have dropped to under 600p, closing yesterday at 592p. At that level, with pre-tax profits estimates for this year down to pounds 270m, some analysts think the shares may still be too expensive, trading on a price-earnings ratio of 19.5 times.The company was saying nothing yesterday, but a prime concern among analysts appears to be the US publishing company Addison-Wesley, which is highly dependent on the educational sector. But it is believed as many as four other houses are ready to follow, reducing current estimates from about pounds 300m to pounds 270m, on fears of a weaker performance in US publishing, extra costs in the television sector, where Pearson is a relative newcomer, and some disappointments at Westminster Press, the company’s slimmed-down printing operation.While there are still a few bulls left, sentiment seems to be be running against Pearson. The group saw more than 3 per cent knocked off its market capitalisation, and there could be more damage to come, as other analysts pore over their own estimates.
The two brokers responsible for yesterday’s run, Capel and UBS, had nothing to say. Shares in Pearson, the publishing-to-media conglomerate, were hit by a double profits downgrade yesterday, taking the shine off a strong run since the middle of May. That puts the shares, down 2p at 774p, on a forward multiple of below 8 and vulnerable to any sudden withdrawal of the bid hopes.. Northern has been more aggressive than most in attacking the market outside its own franchise area and reckons to have picked up around 20 per cent of the 50,000 customers in the UK who decided to shop around last year.