Sting in the supermarkets tale

THERE is nothing like a fat cheque to cheer you up, even if there is a sting in the tail. Sainsbury's investors are being promised 35p-a-share cash by the end of July from the sale of its US supermarkets.

They can take the payment as income or capital gain, now or later. That should trim any tax bill.

The tricky bit is that Sainsbury is also 'consolidating' - for every eight shares you own, you will be cut down to seven. This invariably confuses and angers small investors.

Sainsbury says that since the business remains the same, fewer shares should mean a higher price and more earnings. The reality is that the shares, 450p five years ago, are 279 3/4p.

Sainsbury is struggling to get its operations right. Its UK market share, once number one, is now three, heading for four.

Such a serial underperformer would normally be a bid target. But the competition authorities kiboshed four of the five would-be bidders for Safeway.

That thins the ranks of suitors down to those outside food retailing - largely financial buyers whose only interest is to squeeze cash out. The watchdogs ought to rethink.

Meanwhile, the best hope is chief executive Justin King. He has a huge task and may have to keep cutting prices. Broker Merrill Lynch estimates these are 4.5% higher than Tesco and 4.3% above Asda. Brokers expect £514m profits this year. But a 2.5p% price cut could cost up to £375m.

The shares yield 5.6%, but if profits are squeezed, the dividend could fall. It is covered just 1.2 times by earnings.

Nine brokers rate the shares a sell or reduce. Enjoy your 35p to the full, but Tesco has been a much better long-term bet.

Cleaning up

THE stakes are rising at Virotec, the Aussie mining clean-up group tipped here at 10 1/2p. It hit 31 3/4p last week week as excitement mounted about the US Environmental Protection Agency thumbs-up for its Bauxsol compound. Then it fell to 29p as director Dr Michael Nissen sold 400,000 shares.

One version says Nissen's son is buying a house but the timing was poor and Nissen, 75, is under fire.

Broker Durlacher had taken Virotec on a tour of big fund managers. They like its prospects but board unloading puts them off. Hefty options for directors and staff are now in the money.

The group's potential is still large. The US agency's 'superfund' comes to $30bn. The Gilt Edge mine where Bauxsol was tested has an £110m budget. Landing a UK water contract would be a big break.

Virotec's revenues are still tiny. The temptation to launch a further fundraising is real, but it says it does not need one.

Virotec must turn potential into hard revenue. It appears to be getting closer to success, which means the shares could go further. But keep an eye on who is selling.

Wyndeham Press could be a winner

TWO lean years for advertising made it tough going for publishers - and for Wyndeham Press, which prints 650 magazines from Autocar and Ideal Home to the British Medical Journal.

It had a grim six months to last September as new launches dried up and costs had to be cut. The second half was much better but profits still fell from £6.1m to £2.6m after write-offs.

Chief executive Bryan Bedson is confident that better times are coming. Debts are down from £39m to £30m, dividends up from 4p to 4.25p. A new sales team is seeking business from supermarkets and car firms.

Too many UK printing plants have meant cut-price competition but Bedson says some are closing.

Wyndeham has spent £65m on new equipment over five years - more than its £55m stock market value. This has prompted talk of a bid, probably from rival St Ives.

Wyndeham's broker Numis predicts £7.4m profits this year, putting the shares at 120p at 11.4 times earnings, with a 3.8% yield. Worth having.