Sage Links with IBM to Provide Internet Services

Sage, the leading accountancy software group, has joined forces with IBM to offer a range of internet services to its customers. The partnership aims to bring Sage's 2 million worldwide customers online, with a free internet service enabling them to create their own websites. The move has sparked a surge in Sage's shares, which jumped 21.5p, or over 10%, to £22.50, valuing the company at £2.7 billion.

Key Takeaways:

• Sage's partnership with IBM will provide a range of internet services to its customers, including a free website creation tool.
• The move aims to bring Sage's 2 million worldwide customers online, with a focus on businesses rather than general consumers.
• Despite analyst concerns about the "internet bubble", the partnership has been welcomed by the market, with Sage's shares experiencing a significant surge.
• Sage dominates the market for accountancy software for small and medium-sized companies in the UK, France, Germany, and the US.
• The company's pre-tax profits rose to £35.5 million in the six months to March 31, up from £23.9 million the previous year.
• Turnover grew 49% to £132.5 million, driven by strong revenue growth in the UK and improved margins in France.
• Analysts have raised their full-year forecasts for Sage, with the company's earnings per share expected to rise to 20.58p (14.68p).

Statistics:

• Sage's shares jumped 21.5p, or over 10%, to £22.50, valuing the company at £2.7 billion.
• The company has 2 million worldwide customers.
• Only 3% of Sage's UK customers have websites, compared to 15% in the US.
• Sage's turnover grew 49% to £132.5 million in the six months to March 31.
• Pre-tax profits rose to £35.5 million in the six months to March 31, up from £23.9 million the previous year.

Sources:

• Financial Times, March 31 1999.
• Paul Walker, Chief Executive of Sage.
• Paul Morland, analyst at BT Alex Brown.