Smaller Companies: A Workplace that's worth plugging into

Shares in Workplace Technologies were recently placed on the stock market at 175p, to rise immediately to 210p. Last week, they closed at 204.5 - not bad for a debutant in this market climate.

That represents instant profits, but WT should repay investors over the longer term. The draw is its position in a fast-growing market: integrated networks. An integrated network is a straightforward concept; it is where companies transmit computer data, voice and increasingly, video, over one electronic network. More companies also want access to the Internet, which requires similar networking know-how.

Other big users of these services are the call centres set up by companies to serve customers. For example, WT designed and installed a network to handle phone enquiries from Scottish Power's 1.7 million customers. Another contract was to set up and maintain a network for the Ministry of Defence procurement headquarters near Bristol.

WT was a management buy-out from ICL in September 1995. Since then, it has raced ahead. Something to watch out for is that WT, freed of ICL's management, does not succumb to the fate of many MBOs which, after initial gains, run into a much slower phase of growth.

Last week's warning from Ionica also shows the perils of high-tech shares, although WT is well established, having been founded in 1968 and having a good profits record. This year it expects pre-tax profits of pounds 3.32m, which should produce earnings per share of 7.9p. In 1996, it had sales of pounds 52m, pre-tax profits of pounds 1.97m and headline earnings per share of 3.55p. First-half results this year were sales of pounds 30.7m, pre-tax profits of pounds 1.45m and earnings per share of 3.13p.

That leaves the shares on an immediate forward PE of 25 times; expensive, but WT should do well in the longer term. Any slip-ups, and a takeover could be on the cards as insurance.