Volante shares dip sharply after chairman's address

Stan Beer
Thursday, 24 November 2005 00:39

IT Industry - Listed Tech

Shares in box mover and IT services company, Volante Group (ASX:VGL), took another dive yesterday after the company's chairman, Robin Crawford, delivered a sombre presentation to shareholders on why bottom line earnings would be down by up to 39% for the first half.

There was nothing essentially new in Mr Crawford's address except a reiteration in detail of Volante's strategy going forward of reducing its dependency on the low margin hardware sales business and increasing its dependency on the company's growing services business in the 500 to 5000 seats range.

Mr Crawford, who has bought more than 700,000 VGL shares in the past week and now owns more than 4.3 million shares in the company, attempted to provide confidence to shareholders and the market that Volante's cost reduction and services oriented strategy were sound. However, he cast doubt on the company's ability to provide shareholders with a dividend this year, saying Volante hoped to maintain the dividend but could not make a firm commitment.

In all, Mr Crawford's presentation appeared to spook the market rather than inspire confidence and trading in VGL shares was fast and furious, with the price diving to a low of 82c after opening at 95.5c before recovering to close on 89c. The trading activity of 351 trades for a volume of 2.2 million shares seems to suggest that much the buying and selling was speculative profit taking. VGL shares are now down to just over half of their 12-month high of $1.70 in January this year. With Volante claiming that the profit impact charges of $3.25 million the company took in the first half were non-recurring, the coming half should reveal whether the current low price of VGL shares is justified.