Solution 6 Holdings Limited

By Intelligent Investor · 24 Mar 2000

By Intelligent Investor ·
24 Mar 2000

Recommendation

Solution 6 Holdings Limited - SOH

Current price

n/a

Price at review

$13.26 at (24 March 2000)

All Prices are in AUD ($)

Solution 6's share price was driven by the company's insatiable appetite for acquisitions during the past few months. This strategy had all but run out of steam until this latest news - the takeover of Sausage Software to create the biggest Internet play on the stockmarket. Telstra's 40% stake - through a $50m cash injection and the sale of some online financial assets - in the new company means it is now free from government constraints to pursue Internet acquisitions and so we can confidently predict the old Solution 6 program is back with a vengeance.

When the company reported recently it showed that, operationally, it had stumbled. Thanks to acquisitions, revenue growth was up 107% compared with the same period last year, but sales from existing businesses hardly moved. Costs, meanwhile, blew out. A loss after tax before abnormals of $14.1m was reported and this was before an abnormal loss $51.8m, largely due to a shift in accounting policy.

Major player

It has now been given a new lease of life and is beginning to look like a major player in this extraordinary market.

Investors are going to be encouraged by the presence of Telstra in this company, but Solution 6's share price will become the surrogate indicator of sentiment to Internet shares in the market. This will inevitably mean a volatile ride and one which could still crash and burn. It is an interesting development, but a perplexing one. Conservative investors should continue to TAKE PART PROFITS as recommended in issue 45 ($13.91). Those who are prepared to accept what may be a wild ride, HOLD.

IMPORTANT: Intelligent Investor is published by InvestSMART Financial Services Pty Limited AFSL 226435 (Licensee). Information is general financial product advice. You should consider your own personal objectives, financial situation and needs before making any investment decision and review the Product Disclosure Statement. InvestSMART Funds Management Limited (RE) is the responsible entity of various managed investment schemes and is a related party of the Licensee. The RE may own, buy or sell the shares suggested in this article simultaneous with, or following the release of this article. Any such transaction could affect the price of the share. All indications of performance returns are historical and cannot be relied upon as an indicator for future performance.

Solution 6 Holdings Limited

Recommendation

{{ twilioFailed ? 'SMS Code Failed to Send…' : 'Enter verification code' }}

{{ completedStep1 ? 'Authentication & Security' : content.trialHeading.replace('{0}', user.FirstName) }}

{{ content.upgradeHeading.replace('{0}', user.FirstName) }}

Updating information

Please wait ...

Your membership to InvestSMART Group recently failed to renew.

You've recently updated your payment details.

Please click on the ACTIVATE button to activate your Intelligent Investor 15-day free trial

Please click on the ACTIVATE button to finalise your membership

Unsuccessful registration

Forgotten password

Recommendation

Solution 6 Holdings Limited

Recommendation

{{ twilioFailed ? 'SMS Code Failed to Send…' : 'Enter verification code' }}

{{ completedStep1 ? 'Authentication & Security' : content.trialHeading.replace('{0}', user.FirstName) }}

{{ content.upgradeHeading.replace('{0}', user.FirstName) }}

Updating information

Please wait ...

Your membership to InvestSMART Group recently failed to renew.

You've recently updated your payment details.

Please click on the ACTIVATE button to activate your Intelligent Investor 15-day free trial

Please click on the ACTIVATE button to finalise your membership

Unsuccessful registration

Forgotten password

Join the Conversation...

Recommendation