Gijima renews mystery cautionary

Added by Editor on 20 May 2011.
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Jonas Bogoshi

Technology services company Gijima has renewed a cautionary notice to shareholders, warning that it is in discussions that could affect its share price.

JSE-listed Gijima first issued the notice on 1 April, in the process lighting a fire under its share price. After climbing by 14,5% on the day the first notice was issued, the share has since fallen back to below levels it was trading at before the spike.

“Pursuant to the mandated strategy of maximising shareholder value, shareholders are advised that the company is still in discussions, which, if successfully concluded, may have a material effect on the price of Gijima shares,” is all the company says in its update to shareholders.

Although Gijima is giving away no information about the nature of the negotiations it’s involved in, some analysts have speculated the company may be keen to do a deal in the telecommunications space. The line between IT services and telecoms is becoming increasingly blurred.

Gijima CEO Jonas Bogoshi has previously said the company needs to partner with a telecoms provider. One analyst has speculated the talks may be related to Gijima’s perceived need to become more seriously involved in the data centre space.

The company’s share price has performed poorly in recent months after it announced it had reached a settlement with a key customer, the department of home affairs, over a giant project to modernise the department’s computer system. A settlement with the department splashed Gijima’s income statement in red ink in the six months to 31 December 2010.  — Staff reporter, TechCentral

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