Investors in Moneysupermarket.com (MONY) received a welcome boost today when the price comparison website operator unveiled a 12.9p special interim dividend payment. The return, in excess of the 10p of special payments predicted by broker N+1 Singer, was greeted cautiously by the market, coming as it did with news that founder Simon Nixon is selling down his stake. The stock was up marginally, 0.7% ahead at 209p.
While the £1.1 billion cap is favoured by us (see Griller, Shares, 16 May) others are more concerned about the possible competition threat posed by Google (GOOG:NASDAQ). Numis believes that ‘around half’ of the company’s earnings before interest, tax, depreciation and amortisation are ‘at risk’ following the US search giant’s launch of competing credit, savings, insurance and mortgage comparison services.
In light of such concerns it is little wonder that the decision by Nixon to dispose of stock equating to 14.8% of the company’s issued share base should be timed to coincide with the dividend announcement. A dividend is the best signal of confidence in the future, indeed the announcement explicitly referred to the special as a reflection of faith in the business’ ability to ‘generate cash on an on-going basis’.
In March 2011, Google acquired www.BeatThatQuote.com which is the technology that lies behind the group’s competing price comparison offerings. The firm has since been told by European Union competition authorities that it must clearly signpost its own services so there is no confusion that it might be promoting its products in internet search rankings over those of third parties such as Moneysupermarket.com.