The Investment column: Merant

MERANT, the computer company formed from the merger of Micro Focus and Intersolv, is a rare beast. Despite being involved in the Internet and expecting profits this year, the company trades on just 13 times forecast earnings.

Merant is perceived as a millennium bug company whose business is on the verge of oblivion. It has specialised in vetting computers which use the now-superceded Cobol language. Among its clients are 96 of the US's Fortune 100 companies. But Merant's rating misses the point that these companies, having invested heavily in checking their systems are compliant, will retain Cobol-based systems after the millennium. That's an opportunity for Merant to supply services to those wanting to update Cobol systems for e-commerce. And because everyone thought Cobol was heading for oblivion, Merant has few rivals.

Yesterday's results, showing revenues of $374.2m (pounds 233m) down from $379m a year earlier, show the merged group is holding its own. Analysts expect pre-tax profits of pounds 31.3m this year and earnings of 12.7p, rising to pounds 50.7m and 20.0p per share in 2001. The shares are too cheap.