BT bounces back on wave of Net plans

This week’s stock market review

British Telecom once again dominated the minds of City analysts last week.
First came the news that the company’s US competitors Alta Vista and NT would
radically cut their Internet access charges to UK customers. The news weakened
BT and also proved a severe body blow to Freeserve, the Internet subsidiary of
Dixons, whose share price plummeted.

BT’s weakness was only short-lived, however, as it announced a cut in
charges and revealed plans to link up with more than 30 companies in a bid to
make the Internet a mass market game. After the announcement, BT stock put in a
storming performance, which helped propel the FTSE to above the 6,600 level.

Many analysts have been growing inpatient with the company, which they
regard as a toothless bulldog. Now, though, a strong buy recommendation has
been placed on BT with a price target in excess of £20. raises offer share price at the 11th hour lived up to its name last week when it shifted the goal post
at the 11th hour before the close of its floatation offer. On Thursday, it
announced a 67 per cent jump in the price at which investors could subscribe
for its shares by the deadline of last Friday.

The hike means investors can expect to pay up to £3.80 per share – far
higher than the £2.30 the Internet shopping company indicated the week before.

On the basis of the new price, the company will immediately be worth more
than £530m and the two young founders of the company are expected to pocket
between £110m and £160m between them.

Blue-chip departures boost stock prices

Sainsbury’s sacking of its managing director and the resignation of British
Airways’ chief executive has had a marked effect on both companies’ share
prices. Sainsbury’s rose more than 10 per cent and British Airways’ by 15 per
cent before retreating to negative territory.

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