Iona, Smartforce shares in big demand on Nasdaq

 

Ireland's flagship technology stocks, Iona Technologies and Smartforce, have recorded dramatic surges in their share prices on the US Nasdaq stock exchange. On Tuesday, Iona opened up 22.6 per cent at an all-time high of $84, giving it a market capitalisation of more than $1.5 billion.

Meanwhile Smartforce (formerly CBT Systems) rose 13.3 per cent yesterday from $44.07 to $49.93 3/4. This marks a new high for the company since the collapse of its share price in September 1998, having previously traded at an all-time high of $63.

Industry analysts said the renewed interest in both stocks could not be attributed to any company-specific developments. However positive wireless technology deals announced this week from two US-based companies operating in the same sector as Iona are thought to have been responsible for generating investor interest in it.

Iona hosts its annual Iona World event in Boston in April, and tends to hold off on company announcements until then. Investors may be trying to get in now ahead of such developments, which are likely to send the share price higher. Iona has steadily increased its sales to large enterprises over the last 12 months, with contracts in excess of $250,000 rising from just 14 in the third quarter to 25 in the fourth quarter.

Iona's stock is still considered to be lagging its peers within the middleware sector in terms of share price performance. It is currently trading at around 10 times prospective sales, while its counterparts within the industry are running at 15 times prospective sales. Many of the major investment houses are now issuing buy recommendations on the stock.

Some investors took advantage of the sudden upsurge and moved to take profits but still the price ended $5 up at $89 3/4.

Smartforce's gains could not be attributed to any specific company news, apart from consistent performance, but analysts speculated it was benefiting from increasing interest in the whole ecommerce sector.

By comparison with other stocks Smartforce may still be reasonably attractive to investors seeking an Internet play. It is currently trading at 14 times prospective sales, a figure considered reasonable within the bullish technology stocks market.

The turnaround in the fortunes of both SmartForce and Iona has not happened overnight as both stocks suffered heavily last year. Iona's share price plummeted last April from $30 to $15 following a profit warning, and Smartforce never quite recovered from the collapse of its stock in late 1998. Its problems were compounded last October when a poorly orchestrated change of name and product strategy sent the shares plunging from $27 to $14 in one day.