The value of Smartforce, formerly CBT Systems, soared by $175 million (€171 million) to $1.67 billion on Nasdaq yesterday. The rise is a recognition by investors that its strategy to move into Internet training is the correct one, according to market sources.
The shares rose by $4 1/4 to $34 1/4, representing a 14.2 per cent increase and reached a high of $38 on the day. They were $25 10 days ago and have been rising strongly over the past few days.
US analysts have been recommending the shares. One of the more recent was Bank of America analyst, Mr Howard Block who put a price target of $40 on the shares. When the group announced its changed strategy last October, the share price slumped to $14.50 from $27.25. The development is to cost $45 million and because the new agreement will recognise revenue over the term of the agreements rather than annually in advance, revenues will be substantially reduced in 2000.
This will lead to a loss this year but profits are expected to flow through in the last quarter of 2000. The new strategy is expected to accelerate the revenue stream.
Smartforce has signed up major clients including Cisco, Novell, Microsoft and Oracle. Yesterday it announced the signing of an agreement with Dell Computer Corporation for the creation and launch of EducateU, an online e-learning university, for Dell and non-Dell customers.
Under the agreement, Smartforce has developed and will host an Internet-based e-learning package. Financial details of the arrangement have not been disclosed but Smartforce said both companies would share the financial benefits. Dell customers who visit the site will be eligible to receive three EducateU course titles at no cost for up to one year; additional courses will have prices ranging from $4.99 to $199.
