Battered lastminute is looking travel-sick

ONLINE travel company

Punters were then stocking up amid mouthwatering rumours of a £1bn cash offer - worth around 350p a share - from Barry Diller's InterActiveCorp, the world's largest e-commerce company.

A scathing Collins Stewart 'sell' circular recently put the boot into a share price still nervous about co-founder Martha Lane Fox's shock decision to quit as an executive director. Such unexpected executive departures often presage bad news and dealers have been on the alert ever since.

Lastminute.com has a close association with the travel industry and news last week of MyTravel's horrendous £911m loss did it no favours.

German group TUI's announcement yesterday that Thomsonfly.com is to enter the low-fare airline market in Europe increases competition fears. And the limited air traffic expansion plans announced by Transport Secretary Alastair Darling upset the applecart, too.

Results posted at the same time as Lane Fox's news suggested that the company is already well on the way to generating positive overall returns. It has a £100m cash pile and a powerful brand.

With no buyers currently in sight and the 200p level not too far away, now would be a perfect time for Diller to strike. Rival eBookers also ran into sellers and closed 28p off at 375p.

Aim- quoted Online Travel, on the other hand, firmed 3/4p to 18p. Broker Altium Capital is bullish after successfully placing-55.3m shares at 15p with various institutional investors. The £8.3m raised will strengthen the group's balance sheet to meet regulatory requirements and to finance anticipated growth.

Altium has upgraded its current-year pretax profit forecast from £3.3m to £3.5m. It believes Online Travel trades at a significant discount to its e-travel peers. Its target price is 25p.

The Footsie lacked inspiration and limped to a close of 4333.0, down 15 points.

The dollar hit a record low of $1.2361 against the euro, but rallied after the US current account deficit came in slightly ahead of expectations at $135bn in the third quarter.

National Grid Transco sparked 9p higher to 394 1/2p after broker Dresdner Kleinwort Wasserstein upgraded from hold to add and lifted its target price to 415p.

A disappointing trading update from Pearson (13 1/4p cheaper at 617p) unsettled media stocks. Reuters fell 7 3/4p to 228p in sympathy.

A shock profits warning from French IT consultancy Cap Gemini dragged Sage Group 4 3/4p lower to 170 3/4p.

Davis Service Group advanced 12 1/2p to 356p after selling HSS, its tool hire business, for £145m. The move led to broker Oriel Securities upgrading from reduce to add.

Following a meeting with chief executive Richard Huntingford, broker Bridgewell advised clients to switch on to Chrysalis, 7p better at 220 3/4p.

Analyst Patrick Yau says trading continues to be strong in the radio business and he expects Chrysalis to close the 20% yield differential with rival Capital over the next 12-18 months and to outperform what should be a healthy industry over 2004.

Hardman Resources gushed 7p to 36p after announcing a significant oil discovery at the Tiof West exploration well off Mauritania.

The clearance of an overhang of 300,000 shares at 35 1/2p should pave the way for a big bounce at Medical House (2p off at 38 1/2p) in the New Year. Dealers hear that the news flow will be bullish.

Ferraris Group gained 6p to 148 1/2p on tracker fund support in the wake of its promotion to the small cap index.

VEHICLE management information group Minorplanet Systems crashed 25 1/2p to a low of 51p following a warning that sales in the first quarter will be hit by a reorganisation in the UK business.

Franchise sales in Spain and France have been disappointing and it is talking with a potential new partner who may invest in the French business. Recovery looks some way off for MS which incurred a stonking £52m loss last year.