By Jonathan Boyd Results released in the past few weeks continued to offer a mixed outlook ...
By Jonathan Boyd
Results released in the past few weeks continued to offer a mixed outlook for the services side of software and computer services.
Logica and CMG remain favourites with many analysts, despite downward pressure on their share prices because of continuing negative sentiment towards all tech stocks.
Both companies reported comforting figures recently, which were seen as further evidence that the clamp on corporate IT services spending this time last year has loosened.
Milan Radia at UBS Warburg said the best opportunities in software companies were among network software developers.
"A lot of telcos have built out network capacity. There seems to be a degree of excess capacity at the moment. What telcos have to do is to offer new services which are application and content focused. They need to enable their networks to offer those services. And to do that they need to upgrade their network management platforms."
UK winners in this space, according to Radia, included Orchestream and Riversoft.
Also gaining from the spending pattern is Intec Telecom Systems, which reported strong earnings in mid-February. Lehman Brothers set a £6 price target on the stock and recommended it as a buy.
Other software houses are not doing so well. Actinic, which develops software for building online shops, confirmed the fallout from last year's meltdown of online retailers. Its business in January and February has led it to warn about earnings for the year.
The sector overall, meanwhile, continues to wait for the bottom to be reached in technology stocks as indices such as the FTSE 100 continue to hold to near record highs.