CONNOISSEURS of the ITV share price will have noticed an intriguing pattern developing since the company was created out of the merger of Granada and Carlton Communications. For all the broadcaster’s difficulties and disappointments, the shares never seem to drop much below the 100p mark before bouncing back, as the chart below shows.

Three times since the merger they have slid to this apparent floor, only to rally. Each time the shares have been buoyed, either by bid hopes — real or imagined — or by the judgment that there surely must be some value in a group with such a monopoly of terrestrial commercial television.

In the past few weeks the shares have again dived, this time from 125p down to just above the 100p mark. So will history repeat itself? Is there a nice little short-term earner for nimble speculators? Yesterday’s statement suggests that the answer is a tentative “yes”. Charles Allen, the chief executive, offered hungry investors a few tasty morsels.

First, there was the decision to boost the return of cash to shareholders from £300 million to £500 million. Then, there are the extra efficiency savings. Mr Allen has taken a fresh look at the business and reckons he can cut out another £100 million of annual cost by 2008.

Most important was the demonstration that ITV today is much more than the No 3 button on your remote. True, ITV1 is a horror show, losing viewers and advertisers at an alarming rate, but revenue pain at ITV1 in the first six months was more than offset by gains from the group’s six other channels and its programme-making side. Overall, revenues were up, albeit by a modest 2 per cent.

Mr Allen’s new strategy is not without risk. Fitch, the ratings agency, immediately downgraded its rating on ITV’s unsecured debt to just one notch above junk. ITV will become more leveraged. Nor should anyone read all that much into the 100p floor theory. Trends don’t go on for ever and patterns do not endlessly repeat themselves.

That said, the gloom about ITV’s problems does seem to be fully discounted. Those looking for further reassurance can take comfort from Anthony Bolton, the Fidelity stockpicking star, who still has a £200 million punt on ITV.

The shares, which yesterday rallied 2¾p to 105¼p, look an attractive short-term punt for the opportunistic investor.

Misys

NOWHERE in the trading statement yesterday from Misys was there any information on the one question most exercising the minds of shareholders. There was silence on the putative buyout approach, which is thought to be led by the chief executive Kevin Lomax.

Meanwhile, the news on trading at the software group was patchy. Underlying order intake from its banking customers was up by a reassuring 8 per cent. Yet the other main division, healthcare customers, was looking much more sickly with a 4 per cent decline.

The earnings guidance of 14.1p-14.6p per share for the year to May 31 is encouraging. Analysts had been pencilling in around 14.2p and a total dividend of 7.2p. The new guidance places Misys on a multiple of less than 15 times earnings after the 4p fall in the share price to 213p yesterday.

That looks about fair, given Misys’s still-decent market niche, reasonable growth prospects and, of course, the added spice of a possible bid.

This remains the biggest immediate unknown. The independent directors, led by Sir Dominic Cadbury and advised by JPMorgan Cazenove, have a pivotal role to play not only in judging the attractiveness of any offer but also in ensuring that shareholders are getting an accurate picture of the company’s current trading and prospects.

Mr Lomax — if it is Mr Lomax — obviously would be conflicted. He is obliged to give a fair account of trading, but inevitably would want to pick up Misys as cheaply as possible.

It does not help that the sogginess of the Misys share price ahead of a bid approach was partly down to Mr Lomax’s own prickly relationship with shareholders and the company’s corporate governance shortcomings.

A bid is not a foregone conclusion. If one materialises, agreement from the independent directors and outside shareholders is far from certain.

Even if it never comes, however, and no rival bidder is immediately flushed out, the company is now considered “in play” and that should prevent too sharp a retreat in the share price. Sit tight.

HBOS

ARE pre-close trading statements getting less informa-tive? HBOS’s yesterday was unusually anodyne. There was barely a hard figure in it, except for the reassuring fact that the bank is still “comfortable with” (ie: expects to beat) the average forecast for full-year profits of £5.2 billion. That’s a good start, at least, but “new” news is meat and drink to the share market, which is always looking for a fresh angle, a fresh reason to buy the shares. Remove this, the sellers prevail — hence HBOS’s 14½p slide to 938½p.

City analysts, of course, got a fuller picture in a private briefing from Phil Hodkinson, the finance director, but that is no use to the army of 2.3 million small shareholders who are left to grapple with gnomic statements such as “credit quality . . . is unchanged from previous guidance”. (Translation: we still think our customers are going to welch on £1.9 billion this year.) They deserve a plainer, fuller statement.

In the meantime, however, the shares look rather good value at 9.9 times expected earnings and a 4.2 per cent yield. Buy.

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