MIDAS SHARE TIPS: Bytes Technology Ready to Rebound after a Difficult Year

This spring Microsoft will turn 50. From modest beginnings in Albuquerque, New Mexico, it has actually turned into one of the largest companies in the world, credited with changing the computing market and, with it, our daily lives.

Microsoft technology initially went on sale over here in the 1980s and, in 1982, Bytes Computer Supplies opened in Surrey, specialising in floppy disks and other accoutrements from the American group.

Today, Bytes Technology, as it is now known, is a ₤ 1.1 billion business with about 1,200 employees and 6,000 consumers.

It floated on the Stock Exchange in December 2020, a fortnight before Britain's first Covid Christmas. Shares were priced at ₤ 2.70, market response was enthusiastic and, by January 2024, they were trading at more than ₤ 6.50. The past year has been less productive, trade-britanica.trade and today shares are just ₤ 4.65. At this level they are undervalued and must rebound through 2025 and beyond.

Back in the 1980s, Bytes' range was little. Early tech geeks utilized Microsoft to write basic documents and create spreadsheets on their computers, and Bytes offered the set that made it possible.

Ever since the computer world has changed beyond acknowledgment, with Microsoft alone offering hundreds of services, from Outlook and Teams to develop ware, cloud storage and, lately, Copilot, an expert system tool.

In safe hands: Bytes Technology has sales staff who know their products within out

Individuals can buy a number of these products straight, however services tend to go through agents, called resellers, who provide lower costs, suggestions and assistance when things go awry.

Bytes is the top Microsoft reseller in the UK, with clients ranging from the cops, fire service and regional authorities to Harvey Nichols, Trainline and Findus food group.

Customers tend to employ between 500 and 2,500 personnel - large enough to require a lot of IT however not so big that they can sort whatever out themselves. That is where Bytes comes into its own.

Technology has actually become an important tool for private businesses and the general public sector alike, however services have actually ended up being so complex that even IT teams require professionals to assist them work out what to purchase, when to purchase and how to use what they have bought.

Bytes personnel are highly trained, typically starting there as graduates and spending years with the firm.

To an outsider, discussions in between these salesmen and their clients can seem like PhD interactions - or gobbledegook. To those in the understand, such thorough negotiations are an important part of organization success.

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Bytes president Sam Mudd prides herself available high-level service to brand-new and existing customers and, although Microsoft is a major partner, she works with a series of providers, covering almost every innovation need, consisting of cyber security.

A long-time staffer, Mudd took the helm last spring after previous chief executive Neil Murphy resigned, having bought shares in Bytes without telling the board.

Investors took fright, Bytes stock dropped and, although Murphy was later on cleared, the shares have actually remained depressed.

Mudd is undeterred, having invested recent months a development plan developed to drive sales and earnings over the next five years.

Potential is clear. Despite its primary position, Bytes has simply a 4 percent share of the marketplace so there ought to be lots of opportunities to expand.

Despite wobbles on Wall Street, need for software application is increasing too, with with forecasters recommending yearly development of about 10 per cent.

Brokers expect Bytes earnings to increase 19 percent to ₤ 73 million in the year ending February 28, climbing to ₤ 87 million by 2027.

The group has a history of paying regular and unique dividends too, forking out 8.7 p in ordinaries and 8.7 p in a one-off special in 2015, and anticipated to provide 19.6 p for 2025, increasing to 21.5 p next year.

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Midas verdict: Recent results from Microsoft and other tech titans may have disappointed financiers, but the days when we managed perfectly well without IT are long gone.

Bytes helps companies, charities and the general public sector to browse the digital minefield.

With a strong performance history and a track record for providing on its promises, the company must show resilient, even in today's uncertain times.

That makes the shares a buy, at ₤ 4.65.

Traded on: Main market Ticker: BYIT Contact: bytesplc.com