CITY VIEWIt all ads up to trouble

Published on Tuesday 8 January 2002 00:00

TWO morsels of bad news seem to confirm each other’s pessimism today.

Aegis, the large British media buying group, offers its prediction that advertising will continue to fall for the rest of 2002.

Advertising revenues are a good measure of wider economic health but they are of particular and urgent importance to broadcasters and newspaper publishers .

We also learn today that recruitment advertising has shrunk for the eighth month in succession.

Although this will register as a loss of income for newspapers, it seems to offer a wider measure of businesses not replacing people who retire or move, a sure sign that company decision-makers remain apprehensive about the future.

The sectors that are losing the most new staff adverts include accountants - necessary functionaries to any company. A loss of demand for accountants does seem to token a widening commercial gloom.

An analysis of the unemployment figures shows that an increasing number of people genuinely unable to find a job are middle-class professionals whose competence or diligence are not doubted but whose former security has evaporated.

We used to think of the unemployed as blue-collar workers who were marginal to the labour market but it often seems easier for the unskilled to win modest jobs than it is for accountants or other professionals whose career is interrupted.

It is foolish of companies to try and save money on advertising. In fact, a downturn is an occasion to spend more on promoting your wares.

Branching out

ALCHEMY Partners, the private equity firm, has agreed to rescue the computer software company Cedar Group for a deal valued at 3.8 million. Being a Cedar shareholder has been a horrible experience over the last nine months.

It was capitalised at 964m in March. That had shrivelled to less than 3m by last week.

The acquisition comes just in time to save the company from insolvency. The main loss taker is Halifax Bank of Scotland, the company’s lead creditor, which is writing off 20m of outstanding debt for a nominal sum of 1.

The deal is interesting as it marks a shift for Alchemy traditionally acquiring old economy firms and reshaping them back into prosperity. Cedar is now its third information technology acquisition.

Cedar was never as forlorn as the market interpreted it. It has many useful contracts and good prospects and the dirty job of cutting 400 of its jobs has already been performed.

Silver lining

ADVANCED Medical Solutions says it has refined new dressings for wounds and burns.

Medics now think that flesh wounds heal better when kept moist. It has not been easy to find the right material to do this. It turns out that seaweed is the best option.

To that surprise is added its new technique of micro-thin silver wiring which seems to accelerate healing and perform other benefits previously sneered at by science as no more than superstition.

Silver was regarded as a helpful cure in Antiquity but it is only now that it is being recognised as having anti-static and conductive properties which will help modern medicine. For reasons no one has yet explained the combination of seaweed and silver also kills body odours, a distressing side effect of wounds. AMS shares look a very good bet.