Market Report: Poor reception for 7Digital as BlackBerry shuts up music store

 
On track: Lana Del Rey, left, and others will be streamed by 7Digital Photo: Getty

Investors tuned out of online radio and music-streaming specialist 7Digital today as BlackBerry pulled the plug on its mobile download store.

Shoreditch-based 7Digital, which came to AIM last month through a reverse merger with UBC Media, operates BlackBerry’s music store, which the struggling phone-maker has decided to shut.

BlackBerry is one of 7Digital’s biggest customers, but the company said the loss of download business would not affect forecast sales of £14.3 million for the year.

Chief executive Simon Cole said the company is still working with BlackBerry on other music deals, including offering a music “locker” service for BlackBerry owners, and added that new business from elsewhere would more than make up for the closure.

Cole said: “Downloading music is an area in recession — the future is in streaming. In the past four weeks we have announced two major customer wins of global streaming businesses.”

7Digital has inked a deal to stream the likes of Lana Del Rey to ROK Mobile customers in the US and Lenovo handset-owners in India and the Middle East.

But despite management’s optimism, the BlackBerry announcement spooked investors and 7Digital collapsed 3.25p to 15p.

Strong Chinese manufacturing data buoyed the FTSE 100 today, with miners rallying on hopes that China will be buying more raw materials. Rio Tinto, which recently hosted an analyst field trip to North America, was the best performer, up 84.5p at 3192.75p.

Randgold Resources climbed 109p to 4981.5p, Fresnillo was 14.5p better at 886p and BHP Billiton rose 40.5p to 1930.25p. The blue-chip index was up 31.54 points at 6775.48.

G4S has hit rock bottom, UBS feels, and that’s good. The bank resumed coverage of the outsourcer with a Buy rating and 310p target price. Analyst Rory Mckenzie thinks after a “difficult two years” the firm has “reached a base from which [it] can deliver structural margin improvements”. G4S staggered up 3.6p to 258.85p.

Diageo continued to climb, 33p up at 1899.25p, on speculation that the Johnnie Walker-to-Guinness drinks-maker could merge with brewer SABMiller, up 20.5p at 3408.5p.

A deal would help SABMiller stave off unwanted attention from rival AB InBev.

Wood chip-supplier Active Energy tumbled 0.57p to 2.15p after revealing widening full-year losses.

Restructuring costs pushed the company to a loss of £2.22 million last year, compared with a £729,000 loss the year before. Active Energy also warned that recent unrest in Ukraine has forced it to restructure its operations there.

Embattled insurance outsourcer Quindell, which recently missed out on a move to a premium listing, rose 23.05p to 253.05p as it confirmed blue-chip investment giant Fidelity has upped its stake in the business to 9.84%.

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