Sarantel

I was interested to look at this company for the first time after the recent fall to the current level.

At this point however I don’t feel inclined to buy the shares for the following reasons :-

1. The level of recent Directors shareholdings suggests they themselves have very litle faith in the prospects - that’s always a major concern does anyone know what the other directors shareholdings are ?

2. Looking back through the announcements the company semms to be consistently over optimistic . If this was a private company I owned and the current directors were the management I would not be at all happy that their reports to me had been so “off target”. Managers are paid to ensure that suppliers can supply etc and it’s not really good enough to say .....
‘As stated previously, the Company aimed to ship at least 1 million units in the
year. This target was dependent upon the successful installation of new
equipment in March to boost capacity, and as announced in April, this
installation was delayed by over three months by two key suppliers.’

3. The most recently announced “delay” with regard to their American contract hopefully will turn out to be no more than that but as owners of the business it seems to me that shareholders have been told very little about the background -if you are a part owner of anything then you have a right ,taking account of commercial considerations, to know as much as posssible about negative developments , not kept in the dark.

4.Given the delay in this order prospects for 2006 don’t look to bright when related to the following from the October 2005 Year End Trading Update...

“This win was
for a new and rapidly growing North American market. The Company expects to
derive most of its revenues from the GPS market and this new market during 2006.”

5.I noticed one of the VCT holders had about 22% of its fund in Sarantel when the share price was around 80p that’s a big bet and they can’t be very comfortable if they still hold the same number of shares at the current level . My guess is they might be forced to sell just to reduce their exposure ,irrespective of how they read the medium to long term prospects and this can’t help the supply demand balance for the share price .

Any existing shareholders care to shoot holes in the above ?