By Sonya Rabbitte, 27 June 2000 00:30
NEWS Freeserve shares fell dramatically yesterday following the end of takeover talks with T-Online, and the announcement of a £19.7m loss in its last financial year. The ISP's share price plummeted over 20 per cent in early trading as a result, helping trigger a 19.7 point fall on the London Techmark index. Freeserve is now rumoured to be holding merger talks with NTL. NTL refused to comment on the speculation, while Lesley Smith, group director of corporate affairs at Dixons - the majority shareholder in Freeserve - admitted that Freeserve was still negotiating with unnamed parties. But she added that a takeover bid was not expected in the near future. According to analysts, the cancelled merger and drop in share price came as no surprise, saying that disputes with content providers and tight regulatory control are disrupting the ISP market as a whole. Martin Brampton, analyst with Bloor Research, said that Freeserve has built a strong market position and can afford to sit back and wait for a short period. He also warned against seeing this as an indication that high-tech companies are over-valued, claiming that it merely signals short term turmoil for tech stocks rather than the final death knell. He said: "People are still running away from old economy shares, investors want to see an area with spectacular growth. I suspect that a few semi-sour stocks will not deter the shift of expectation. In the long term, technology shares are an expanding part of the market."
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