COMPARED with the firestorm that preceded Qinetiq’s stock-market flotation, its short life as a listed company has been something of a nonevent.

Two years after their debut, shares in the defence-technology group are still labouring beneath the 200p offer price and have underperformed the aerospace and defence sector by almost 20%.

It has not helped that Qinetiq is so closely wedded to UK defence spending, which is facing a squeeze. With a 19% stake, the company’s largest shareholder, the Ministry of Defence, is also its biggest customer, contributing 43% of revenues in the first half of the year.

On Wednesday, when Qinetiq presents its full-year results, Graham Love, the chief executive, will try to persuade the City that the company is making progress after streamlining a jumble of business units in Europe.

He will also point to revenues taking off in America, where its presence has been bolstered by acquisition. Its Talon bomb-disposal robots have proved popular.

However, Qinetiq’s ventures arm, which is supposed to commercialise the latest laboratory ideas, has so far delivered little.

Five years after privatisation, Qinetiq is finding it hard to shake off its civil-service mentality, though this may dissipate once the long-serving chairman, Sir John Chisholm, eventually takes his leave.

For a former PR man, who built up Shandwick almost 20 years ago, Love has struggled to sell Qinetiq’s story. The company’s shares are trading at 12 times 2009 forecast earnings, making them much cheaper than those of its peers.

Would-be buyers have come close to putting Qinetiq out of its misery, though a golden share precludes BAE Systems from hoovering up the company, as it has done with much of the domestic defence scene.

The best course of action, and one that might finally unlock some value, would be a break-up.

Serco, or perhaps G4S, is a natural home for its long-term support contracts, which include a place in the consortium that will train MoD staff for the next 30 years.

And perhaps Ultra Electronics would have better luck with Qinetiq’s technology operations.

Yell

JOHN CONDRON, chief executive of Yell, has a dry sense of humour and does not suffer fools gladly.

His dedication to phone books after 28 years at the company is laudable; an antidote to fly-by-night chief executives who get itchy feet after three years in a job.

True, a £20m fortune made by prising the business from BT and launching it onto the stock market will have eased the passage of time.

Perhaps now, though, in the wake of a calamitous halving of Yell’s dividend, it is time for a rethink at the top of the company.

Even before the cut – which leaves the shares worth less than a third of their price at the turn of the year – Condron and his team were testing the patience of shareholders.

In these pages, one accused the Ulsterman of being blasé about Yell’s prospects and market position. After all, it was only in March that Condron was protesting the market had turned unduly bearish.

Two months later, and a weakening economy, structural changes brought on by the internet and a £3.8 billion debt burden leave him very little wiggle room.

The Yell team know directories backwards, but the trouble is their business is migrating online faster than even they might like to admit.

It is not yet time for heads to roll. An injection of fresh talent at the top, however, or a clearer succession path, cannot come soon enough.

And the next time the economy decelerates a notch, it may take Yell’s board longer than 30 seconds to discuss whether it needs to resort to a rights issue.

james.ashton@sunday-times.co.uk

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