Evening Standard (London): Alphameric the dark horse in Stanley-William Hill tie

THE Pounds 500 million takeover of Stanley Leisure's betting shop chain by William Hill is also likely to be a surefire winner for Alphameric.

The company provides the software for fixed-odds betting terminals (FOBTs) which are being rolled out in all William Hill's 1613 shops. The acquisition of Stanley's shops will add 624 sites in need of the lucrative FOBTs on which punters play casino games such as roulette.

Alphameric's broker, Investec Securities, can hardly contain its excitement about the deal and has repeated its strong buy recommendation on the shares.

It sees Alphameric and William Hill expanding their relationship as the rollout gathers pace.

William Hill is talking of an " upfront" investment into Stanley's shops of Pounds 10 million to " harmonise" in-store and head-office systems. Many of these are already Alphameric's, so it follows that it is likely to earn a material slice of that sum. A further Pounds 20 million will be invested over the next few years upgrading the Stanley estate. William Hill is now one-third of the way through its rollout, but the success of the system bodes well for Alphameric in the long term.

Wm Morrison supermarkets continued to plumb new depths in the wake of Friday's profits warning - its third in less than a year.

The group rattled the City with news that rising costs would leave operating margins "significantly" short of last year's level for much of 2005. A lot of the increased cost was attributed to refitting Safeway stores, acquired last year, and converting them into Morrisons.

Now brokers have begun downgrading the group after weekend reports showing growing resentment among institutional investors about the decline in profitability and problems associated with the Safeway acquisition.

Some are calling for chairman Sir Ken Morrison's resignation US broker Lehman Brothers has cut Morrison from overweight to equal weight while trimming its 12-month target from 210p to 190p.

It told clients: "Successive profit warnings have led to a demanding recovery profile for a group with little visibility for investors, or indeed management".

Lehman also reckons any recovery will be pushed back from the second half of this year to the first half of next. Panmure Gordon says Morrison will post a loss this year and that it could be another four years before it recovers to 2004 levels. It says the company is in a mess and has cut its target from 170p to 150p. Teather Greenwood rates the supermarkets chain a sell but reckons calls for the resignation of Sir Ken should not be heeded.

His understanding of the business is important, says the broker, though it concedes the management needs to be strengthened.

Financial Times and Penguin books publisher Pearson fell after it was downgraded from reduce to neutral by UBS on valuation grounds. The broker also cut its target from 640p to 590p and lowered its profit estimate by 9% to reflect changes to accounting standards.

Lower oil prices boosted stocks in New York overnight, with the Dow closing 112.17 higher at 10,252.29. But US enthusiasm did not spill over into the Far East this morning, where share prices fell sharply. In Tokyo, the Nikkei 225 closed down 121.83 at 10,825.39, while in Hong Kong, the Hang Seng index was 214.16 lower at 13,652.65 by midday.