Finally, and this will be my swan song, on the subject of RXP and SMX, gee...I dunno.
A few - maybe 8 or 10 - years aago, I used to like the notion of investing in IT consultancies.
The capital-light nature of their businesses appealed to my sense of high Return-on-Capital. After all, they are just people-businesses.
Trouble for me that I cannot be convinced that these companies can ever be the architects of their own destiny.
Their financial fortunes are very much driven by factors outside their control; for example, during economic slowdowns (such as now) they don't have any work and have to often scramble at short notice to make their fixed costs, variable.
There's also the perennial problem of excessive customer concentration...often if one of the major banks or some or other State government embarks on a major systems upgrade, then whichever IT consultancy is lucky enough to have jagged the contract, makes a poultice of money.
While it lasts.
So these IT consulting businesses have always had an element of lacking durability about them.
If a few major corporations or government agencies sneeze a few times, all the IT boys tend to get pneumonia, is my observation.
I mean, just look at the best-of-breed in the sector, SMS Consulting.
It's been a lean few years for them.
But maybe that means they are due for a cyclical pick-up in work.
