Holocaust of the IT agencies in the downturn

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We publish which agencies went under and how the rest performed in this bonfire of the IT agency share prices. A couple went bust and one has lost more than 98% of its value.

Best and Worst

We have here a list of the Stock Market quoted agencies which are predominantly in the IT area and the ones that have done best (and worst).

We publish the percentage of how much their shares have fallen (or risen) since their peaks in the boom, with the peaks usually in 2000 / 2001. It should be pointed out that Robert Walters didn‘t start trading until July of 2001.

The List

+41% – CPL

-60% – Robert Walters

-81% – Spring Group

-87% – Glotel

-91% – Harvey Nash

-92% – MSB International

-93% – Lorien

-96% – Highams Systems

-99% – Parity

-100% – SBS (went into administration and came out as a shell)

-100% – RDL (went into liquidation, losing Stock Market quote with the assets sold off to the directors who are now trading under RDL (UK))

Irish Market

CPL are an Irish agency trading mostly in Ireland but quoted on the UK Stock Market. It looks like the Irish IT jobs market has come out pretty much unscathed by the crash, unless of course CPL were doing seriously well all the way through a bad market

It‘s astonishing that seven of the eleven quoted agencies have lost more than 90% of their peak values, with Parity, one of the big, big agencies, losing 99% of their value (when rounded).

What a roll call of the high and might there is in there with agencies like MSB, Lorien, Parity, Harvey Nash and Highams losing virtually all of their value and the mighty RDL and smaller SBS going bust.

Even Spring Group, the biggest name in the IT recruitment market now, have lost more than four-fifths of their value.

Are They Cheap?

Does that mean that agency shares are cheap and that a fortune could be made by buying them as recovery stocks?

Let‘s look at the downturn of the early 1990s to see what happened then.

One share, Computer People, fell as far as 42p that I can remember (it might even have gone down to 28p). When the recovery came they rose within two or three years to more than 10 quid each.

Will that happen again or has the market changed so completely that this is their new share price level? That‘s got to be your own judgment.

Usually the best way of picking shares in a sector is to pick those that have thrived in a downturn – and it is pretty obvious which ones those are.

However, some, like Parity, have sunk so low that they could be quite good recovery stocks. Just imagine if you invested in them and they managed to get back to their old peak?

But will they?

That‘s definitely your call!

* Note it is not known whether any new share issues have affected the share prices

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