Futs down here, as mentioned in an earlier post, Maconis warning will have a profound if not short term on telcoms and spinoffs....
Techs fall, Marconi warns
Alcatel, Ericsson, Nokia off 5%, Marconi suspended
By Ivar M Simensen, FTMarketWatch 11:52:00 PM BST Jul 4, 2001
LONDON (FTMW) - Europe's markets ended trading in negative territory on Wednesday as technology stocks fell in anticipation of a profit warning from Britain's Marconi.
Marconi finally broke its silence after the close of trade, delivering the huge profit warning London markets had waited for all day after its shares were suspended.
The telecoms equipment company, an anchor of the British market, warned that pre-tax operating profits would halve this year as customers in Europe and the United States slashed spending. It announced 4,000 new job cuts and another restructuring. See full story.
Marconi had issued a brief statement in the morning, saying it would give a trading update later in the day. After a string of warnings from the likes of Nokia, Ericsson, Alcatel, STMicroelectronics [FR:012970] [US:STM] and Philips, investors anticipated gloomy news from the company.
French telecoms equipment maker Alcatel [FR:013000] [US:ALA] closed 7.5 percent lower and Sweden's Ericsson [SE:000010865] [US:ERICY] fell nearly 6.5 percent in late trading. In Helsinki, Nokia [US:NOK] [SE:000053994] dropped 4.3 percent. Marconi shares were suspended all day in London.
Although the news was likely to be bad, Heiko Breiholz, fund manager in Hanseatische Investment Gesellschaft, saw some light at the end of the tunnel: "Sentiment is now so bad that prices are likely to suffer, but I think so much has already been priced in that we can start to look for a trading opportunity in stocks like Alcatel, Ericsson and Nokia."
Blue-chip indices were in negative territory with the CAC 40 [FR:1804546] closing down 0.6 percent and Frankfurt's DAX 30 [DE:1876534] dipping 0.6 percent in late trading. In London, the FTSE 100 [UK:1805550] ended 0.7 percent lower.
On the new markets, the Neuer Markt 50 [DE:1809455] fell 1.9 percent in late trading and the FTSE TechMARK [UK:1859502] fell 3.9 percent to hit an new all-time low.
The pan-European FTSE Eurotop [UK:1883619] fell 0.5 percent. See European indices at a glance.
The U.S. markets are closed for the Independence Day holiday. Last night, the Nasdaq [US:COMP] closed down 0.4 percent and the Dow Jones [US:DJIA] closed 0.2 percent lower in a shortened trading session. See U.S. markets report.
Looking ahead
The earnings menu is looking slim on Thursday, with troubled online directory service Scoot.com [UK:SCO] one of the few companies to report earnings.
The main focus will be on the English and European central banks, although neither the Bank of England or the ECB is expected to cuts rates.
Making headway
Oil stocks and automakers were leading gainers, with German luxury carmaker BMW [DE:519000] rising 2 percent after upbeat car sales statistics in the U.S. overnight. See story.
TotalFina Elf [FR:012027], BP [UK:BP] [US:BP] and Shell [UK:SHEL] [US:RD] all rose to take the DJ STOXX energy index nearly 1 percent higher. Oil prices edged higher and Brent crude August contracts rose 27 cents to $25.67 in London.
BSCH cuts Vodafone stake
Vodafone [UK:VOD] fell 2.8 percent after Spanish banking group Banco Santander Central Hispano (BSCH) [US:STD] said it had cut its stake in the world's biggest mobile phone operator to 1.62 percent from 2.71 percent. See story on BSCH cutting Vodafone stake.
British Telecom [UK:BTA] [US:BTY], France Telecom [FR:013330] [US:FTE] and Deutsche Telekom [DE:555750] all fell, bringing the DJ STOXX telecoms index down 2.6 percent.
Dutch electronics giant Philips [NL:PHIA] came back from intraday lows to close unchanged after it said it had bought Marconi's [UK:MONI] [US:MONI] medical systems unit for $1.1 billion, making it the world's second biggest maker of diagnostic imaging equipment. See more on Philips, Marconi.
Also in Holland, Dutch airline KLM [NL:00964] [US:KLM] closed down 4.1 percent after it said first quarter revenues would be below €100 million. See more on KLM warning.
Philips and KLM helped take Amsterdam's AEX index down nearly 1 percent.
The KLM warning hit airlines across the continent. British Airways [UK:BAY] [US:BAB] dropped 1.7 percent and in Frankfurt, Lufthansa [DE:823212] fell 2 percent in late trading.
In Germany, Deutsche Telekom's [DE:555750] [US:DT] Web unit T-Online [DE:555770] announced a revamp of its customer service division, sending the shares up nearly 1 percent, while Lycos Europe [DE:932728] rose nearly 3 percent signed a three-year advertising deal with Espotting Media.
In London, electronic goods retailer Dixons [UK:DXNS] closed largely unchanged after it reported full-year pre-tax profits of £277.8 million, at the upper end of analysts' expectations. See more on Dixons.
Supermarket chain Iceland [UK:ICE] fell as much as 16 percent before coming back some to close down 8.8 percent after it said 15-month pre-tax profit before exceptional items fell to £40.1 million - reflecting a "difficult" year for the group. See more about Iceland's results.
Ivar Simensen is a reporter for FTMarketWatch in London. |
