RAMSEY CROOKALL & CO

EVENING REPORT

14 SEPTEMBER 2010

The afternoon session has been much like the morning one with the FTSE 100 drifting sideways.

There has been some focus on companies that rely, in part, on contracts from the public sector, and the feeling is that the worries about the government tap being turned off may have been overdone.

Telecoms firm Cable&Wireless Worldwide has convinced the government to spend £82m on a five and a half year global telecoms framework contract. The largely UK focused part of the old Cable & Wireless, split off in March, believes the deal with the Foreign & Commonwealth Office (FCO), which also includes a suite of IP services, will pave the way for similar contracts with other government departments. The shares have rallied almost 3% on the news.

Bus and train group National Express, meanwhile, has been given a seven month extension on its East Anglia rail franchise. “An extra 6-months of the franchise may only be worth a one-off up to £10m of EBIT [earnings before interest and tax] in fiscal 2011 (i.e. c£7m after tax) vs NatEx.s market cap of £1.3bn,” RBS notes, but it “keeps NatEx in the rail game a little longer,” buying the company time to repair relationships with the government.

KBC Peel Hunt has upgraded its earnings forecast for fiscal 2011 by 6% but is leaving its recommendation unchanged, “because it does not necessarily mean that National Express has a future in rail beyond these extensions.” Nevertheless, the broker notes, “there is clearly a return to more normal dialogue [with the government] and this augurs well for the company’s potential rehabilitation as a rail provider.

Elsewhere, Directors selling shares at chip designer ARM Holdings seems to have put the kybosh on rumours that the company is being sized up as a takeover candidate. The shares are the worst performers among FTSE 100 candidates, down 4% at 389p.

And retail giant Marks & Spencer has limped into positive territory in the wake of a visit by analysts yesterday to the company’s flagship Marble Arch store in London. Investec issued a “hold” recommendation but said it expects the shares to continue to rally ahead of new boss Marc Bolland’s strategic review.

THE FTSE 100 CLOSED UP 1 @ 5567

THE DOW JONES AT 4.30 IS UP 26 @ 10,570

THE NASDAQ COMP AT 4.30 IS UP 1 @ 2284

Exchange Rates

GBP – USD 1. 5518 GBP – EUR 1. 1941