Analysts expect the explorer to post a small loss this year and then break into profit to the tune of £11m in 2007. Should that forecast prove correct it would leave Northern trading at just 8 times earnings. Buy.Alternative NetworksOur view: Worth a punt.Share price: 96.5p (+1.5p)Alternative Networks (AT) offers small and medium sized companies with a one stop shop for all their telecommunications needs, be they fixed line, mobile or internet. It has carved out a niche servicing companies with between 50 and 500 employees who tend to spend £1,000 to £10,000 a month.In recent years this space has been increasingly abandoned by the likes of Cable & Wireless and Energis, which have struggled to make money from it, leaving the way open for independent players such as AT.As yesterday's interim results showed the group is enjoying fast growth. For the six months to 31 March it boasted a 65 per cent jump in profits to £3.1m and a 43 per cent rise in sales. The company was started 12 years ago by James Murray, its chief executive, and a business partner with just £10,000 of seed capital. Today, it is valued at £42m.Brokers upgraded their forecasts following the results leaving AT shares trading at 11 times forward earnings At these levels they are worth a punt..
A bidding war looks set to break out between BSkyB and BT Group over AOL's UK business, with traders getting nervous over the two companies trying to outbid each other into winning an asset that is hard to value. With increasing competition in the home broadband market, some sort of consolidation is thought to be inevitable, although most sector watchers agree that this deal has come up sooner than expected. The broker Cazenove pointed out that if BSkyB is successful some investors, hoping for a large capital return from the company this year, will be disappointed. Traders said the auction represents something of a dilemma for BT and BSkyB, as neither company wishes to fall behind in the battle for home broadband, but overpaying for AOL could have grim financial repercussions further down the line. One trader said: "With a lot of investment still to be made by both groups in home broadband, this auction is coming at the wrong time.
The only real winner is AOL, although, if the price goes too high, Carphone Warehouse, having made the first big move, could also benefit." Shares in BT fell 3.25p to 232p, BSkyB shed 10.5p to close at 561.5p, while Carphone Warehouse were 2.5p weaker at 334.75p.London trading had a subdued feel to it as the market spent almost the entire session nursing small losses. There was little volatility and the FTSE 100 index of leading shares closed 34.3 lower at 5,620.9. There was little in the way of direction, with most major sectors including some winners and losers.The medical devices group Smith & Nephew was strong again as rumours of a bid from a US rival gained momentum. Johnson & Johnson is the current favourite to make an offer, with traders saying that the bidding will start at 500p.