The Week Ahead: Traders get back to business basics with mmO2

When MMO ₂ unveils its annual results tomorrow, the City's focus will be back on the performance of the business. For the past two months trading in mmO ₂ shares has been dominated by speculation that the company is about to be taken over by KPN. But last week the Dutch carrier ruled out such a move. In a conference call after KPN's results, Ad Scheepbouwer, the group's chief executive, told analysts that he saw no acquisition opportunities that suited his company.

When MMO ₂ unveils its annual results tomorrow, the City's focus will be back on the performance of the business. For the past two months trading in mmO ₂ shares has been dominated by speculation that the company is about to be taken over by KPN. But last week the Dutch carrier ruled out such a move. In a conference call after KPN's results, Ad Scheepbouwer, the group's chief executive, told analysts that he saw no acquisition opportunities that suited his company.

Nevertheless, the consensus in the analyst community is that investors should not be disheartened by this and should hold on to mmO ₂ shares.

Among the most bullish are Dresdner Kleinwort Wasserstein and Investec Securities, which on Wednesday both moved their clients into the stock ahead of the results. Dresdner believes investors should now focus on what made mmO ₂ such an attractive bid target in the first place, namely its strong operating performance.

Investec told its clients to expect a strong performance from both the group's UK and German businesses and drew their attention to the fact that mmO ₂ will be in a position to start paying handsome dividends in the future. The broker sees no reason why mmO ₂ could not pay a dividend of about 5p a share within 18 months. For the year to 31 March 2004, investors can expect a pre-tax profit of about £245m, compared with a loss of £166m previously.

TODAY: British Airways shares have suffered in recent weeks after a series of downbeat comments from low-cost carriers and amid worries that the strong oil price will cause fuel costs to soar.

The stockbroker Williams de Broe believes that the airline's full-year figures will beat consensus forecasts, but warns that the outlook is very uncertain. The extent to which BA has managed to hedge itself against the oil price is not known and the broker fears that the sharp spike in the price of jet fuel may hit earnings hard. The consensus among analysts is for a pre-tax profit of £200m from BA.

Results: Full year - British Airways; Mice Group. Interims - Cambridge Antibody.

TOMORROW: Marconi gave detailed guidance to the market last month, so there are unlikely to be any nasty surprises in the group's full-year results statement. A pre-tax profit of £5m is expected from the telecoms equipment maker, which not so long ago was teetering on the brink of collapse under a mountain of debt.

Results: Full year - BAA; Cranswick; Business Post; Land Securities; Marconi; mmO ₂; VT Group; Yell Group. Interims - ScS Upholstery; Care UK; Abacus Group.

WEDNESDAY: There has been some nervousness in the Square Mile ahead of Compass's interim results, after a disappointing set of figures from its French rival Sodexho. The stockbroker Gerrard believes investors having nothing to fear. It says the setback at Sodexho was due to company specific issues and that there were unlikely to be similar problems at Compass. Gerrard predicts pre-tax profits up from £269m to £280m. Williams de Broe is more concerned that rising food prices could weigh on profit margins at the catering giant. Compass's main defence against this is its buying power.

Wednesday sees Justin King's maiden results as chief executive of J. Sainsbury. Given the recent profit warning, he must be tempted to paint as black a picture as possible of what he has found at the supermarket group but, with the former chief executive Sir Peter Davies looking over his shoulder from the chairman's office, Williams de Broe believes a "kitchen sink" job will be difficult. More likely, according to the broker, is a holding statement from Mr King, saying it is too early for him to have formed a complete view of the business, and hence a strategy for recovery. Profits are tipped to fall to £675m from £695m

Results: Full year - J. Sainsbury; Lidco; Scottish & Southern Energy. Interims - Compass Group; Mitchells & Butlers.

THURSDAY: The focus of Invensys's full-year figures will be the engineering conglomerate's cash flow statement. The group must generate cash if it is to pay down the massive debt burden it has accumulated over the past two years. Invensys has disposed of a large chunk of its business over the past 12 months and analysts expect operating profits to fall to £220m from £270m last year. The City will also want to hear about Invensys's pension fund deficit and the outlook for North America, where investors fear the group is losing market share.

Results: Full year - BPB; BT Group; Findel; Imagination Technologies; Invensys; London Stock Exchange; Luminar; Man Group; Mothercare; National Grid; SABMiller; United Utilities. Interims - Scottish Radio Holdings; Capital Radio.

FRIDAY: Results: Full year - Castings. Interims - Tomkins.

Economics Diary

TODAY: Eurozone - industrial production (Mar). US - Empire State Manufacturing Survey (May).

TOMORROW: UK - inflation (Apr), RICS house price survey (Apr). Japan - GDP (1st estimate) Q1. Eurozone - inflation (Apr). Germany - ZEW business survey (May)

WEDNESDAY: UK - Bank of England MPC minutes (May), Chancellor Gordon Brown gives evidence to Lords Economic Affairs Committee.

THURSDAY: UK - retail sales (Apr). Eurozone - public holiday. Japan - monetary policy decision, monthly BoJ economic report. US - weekly jobless claims, Philadelphia Fed survey (May).

FRIDAY: UK - public finances (Apr), mortgage lending (Apr).