July 25, 2007
The Transatlantic tech divide
There’s nothing new about a CEO complaining about the stock market. When it comes to the bosses of some European tech companies, though, you sometimes have to feel a twinge of sympathy.
Case in point: Frank Dangeard, the head of French tech group Thomson, which has been through a wrenching change as it turns itself from a consumer electronics company into a concern specialising in digital video technologies.
Dangeard, who was brought up and spent much of his working life in Canada and the US, thinks French financial analysts – and the media, come to that – just don’t get tech. For a year after selling Thomson’s old TV business to the Chinese, he says, he met hostile questions from reporters asking why he had sold off a French technology treasure.
On a visit to San Francisco earlier this week, he exhibited equal disdain for French analysts who he accuses of being fixated on his company’s past. With 6bn euros of sales, Thomson is turning into pretty much a pure play on digital video technologies (though it still relies for a sizeable chunk of its cashflow on a declining DVD replication business, and it won’t be until next year that it starts to present a “clean” set of results unencumbered by the past.) Yet its shares still trade at about enterprise value, the same level as when Dangeard joined three years ago.
There seems to be external validation for Dangeard’s thesis that European and American investors are worlds apart when it comes to assessing technology companies. French shareholders have bailed out of the company, he says. From 50-60 per cent two years ago, the French holdings have collapsed to less than 10 per cent. In their place: US value funds, which now own more than half the shares.
This isn’t to say that Fidelity et al are necessarily right – but it does throw an interesting light on how much more in tune American investors are with tech stories like Thomson. If Dangeard hints darkly about one day taking the company out of France altogether, you can hardly blame him – even if it does sound, for now, like so much sabre-rattling from one more CEO in a funk about his share price.
