g peat, page-4

GPG may well increase their holding from the current 18.75% to 19.99%. Beyond this they are less likely to move for reasons explained in my previous posting.

Now, why are GPG buying into SOH in the first place, considering the possible share price erosion once they have reached 19.99%? Well, there are a few possibilities:

1. That they trust current management to turn a profit in 2003/04 for the first time in 5 years, which is likely to boost the share price.

2. That they believe that after 3 bear years in the IT sector, companies will have to start updating their ageing IT infrastructure, giving a much needed boost to the sector.

3. That they believe that after those 3 bear years in IT a shake-out is inevitable, and SOH (as well as others such as MYO, VGL, LOK and UXC) are likely to play in any corporate action. KAZ would have been a prime candidate for a corporate action, but in my view a current PE ratio of 33 renders KAZ somewhat unattractive to potential buyers.

My recommendation is: if you believe in any of the 3 scenarios above - hold. If you don't, wait for GPG to go to 19.99%, then sell out one trading day after that.