THE otherwise cheerful tone of the bourse was shattered by the thrashings handed out to Perth technology middleweight champion ERG and old pug Orbital Engine Corp. The rupture of the ERG relationship with Motorola spooked traders, especially since the terms of the divorce seemed calculated to inflict the maximum damage on the ERG share price, which fell 25 per cent to $1.87 – that’s $5.60 in the old money before the three-for-one stock split.
Motorola has problems of its own at home, with much of its wireless technology production surplus to requirement. It is doubtful that the precipitate sale of 82.6 million ERG shares on a bewildered market helped out very much.
ERG managing director Peter Fogarty made the best of a bad job in handing over a cheque for $46 million to buy out Motorola’s interests, saying they could now collect all the earnings and revenue from the project and regain control of their destiny.
He might have added that ERG’s own technology is highly rated all over the world, especially in China. The company has just won a new contract for the Kowloon-Canton Railway. Perhaps the best number of partners in an enterprise is one. ERG is essentially the same company after last week’s events.
The bombed out stock price is oversold and gives the faithful a chance to pick up a few.
Orbital Engine on the other hand must be running out of chances to show that it can translate winning technology licencing into cash in the till.
Only a few months ago the Orbital share price was $2.40 and the company was within cooee of winning a spot in an ASX index. It is a long way back from $1.54.
