article: analysts talk down shares of telecom companies:
Top Financial News
Thu, 21 Sep 2000, 7:01am EDT
European Stocks Fall, Led by Phone Companies; Lernout
Tumbles
By John Fraher
London, Sept. 21 (Bloomberg) -- European stocks fell, led by phone companies such as British
Telecommunications Plc on concern about valuations of their assets. France Telecom SA dropped
after Lehman Brothers Holdings Inc. said the shares wouldn't rise as high as previously forecast.
``Valuations of European phone companies look very stretched at the moment,'' said Seth
Kirkham, who helps manage 75 million pounds ($106 million) at Investec Asset Management's
Wireless World Fund.
Lernout & Hauspie Speech Products NV tumbled after saying it is cooperating with a probe of
financial statements by the U.S. Securities and Exchange Commission.
The Dow Jones Stoxx 50 Index fell 91.48 points, or 1.9 percent, to 4817.56, dropping for the
fourth day in five. Benchmark indexes retreated in seven of Europe's eight biggest share markets,
six losing more than 1 percent.
The 600-member Dow Jones Stoxx Index's group of 29 phone companies slid 3.8 percent, led
by Versatel Telecom International NV, which slid 3 euros, or 9.7 percent, to 28.
France Telecom declined 5.7 euros, or 4.7 percent, to 114.8. Paul Norris, analyst at Lehman, cut
his forecast for shares of France's biggest company by 15 percent to 140 euros. The stock
dropped as much as 6.9 percent, its biggest intraday fall since July 4.
Three shares declined for every one that advanced in the Stoxx index, which fell 5.94 points, or
1.6 percent, to 376.14.
Cable & Wireless, Lernout & Hauspie, Alcatel
Cable & Wireless slipped 44p, or 4.4 percent, to 950. The U.K.'s No. 2 traditional phone
company sold a quarter of its stake in Pacific Century CyberWorks Ltd. for 37 percent less than it
paid a month ago, suggesting it expects further declines.
BT, the biggest U.K. phone company, lost 61p, or 7.7 percent, to 730.
Lernout fell $5.10, or 21 percent, to $19 on Easdaq. Europe's No. 1 maker of speech-recognition
software, whose shares lost 12 percent Tuesday and Wednesday, is the subject of a number of
U.S. class-action lawsuits alleging that it published misleading financial results.
Alcatel SA led losses among phone-equipment makers as investors sold shares in some of the
year's best-performing stocks on concern the equipment makers will have to help phone
companies pay for new networks.
Alcatel dropped 4.9 euros, or 5.9 percent, to 78.6. The stock is the best performer in the Stoxx 50
in year-to-date terms, gaining 73 percent.
The Stoxx group of 43 technology companies slid 3.7 percent.
Axa, Lycos Europe, Anglo American
Axa SA fell 3.2 euros, or 2 percent, to 154.6. The world's biggest insurer said first-half profit rose
a lower-than-expected 3.3 percent, damped by a fall in earnings from its property and casualty
business.
Lycos Europe NV gained 0.5 euro, or 6.3 percent, to 8.5 on the Neuer Markt. The Internet service
owned by Bertelsmann AG and Lycos Inc. agreed to buy Spray AB of Sweden for 674 million
euros ($572 million) in stock. As part of the agreement, Spray Ventures and Investor AB, the
Wallenberg family's investment vehicle, will buy Lycos Europe shares worth 100 million euros.
Anglo American Plc led mining stocks lower as investors bet slowing economic growth is crimping
earnings. The biggest mining company dropped 80p, or 2.2 percent, to 3,500.
Copper fell more than 2 percent, the biggest drop in 3 1/2 months, as signs of an economic
slowdown in Germany and Italy raised concern that demand may weaken.
Lonmin Plc, the world's No. 3 platinum miner, declined 17.5p, or 2 percent, to 870.
Royal Dutch, Selfridges
Royal Dutch Petroleum Co. led oil companies lower on concern recent gains weren't justified by
the outlook for profit as crude declined. Royal Dutch fell 1.03 euros, or 1.4 percent, to 71.86,
paring its six-month gain to 20 percent.
Crude for November delivery fell as much as 42 cents to $34.82 a barrel on the New York
Mercantile Exchange's after-hours electronic trading system.
Enterprise Oil Plc slipped 3p to 565, and Shell Transport & Trading Co fell 5.5p to 589.5.
The Stoxx energy group is the best-performing industry group over the last six months, gaining
20 percent as crude rose to 10- year highs over the same period.
Selfridges Plc climbed 7p, or 2.4 percent, to 298.5. The company, which is known for its flagship
department store on London's Oxford Street, said first-half profit rose 41 percent after it gave
more space to designer clothing brands.
Gucci Group NV gained 1.75 euros, or 1.5 percent, to 119.7. Delphine Leroy and Antoine Belge,
analysts at ABN Amro, raised their estimate for the third-largest luxury-goods maker's 2000
earnings per share to $4.02 from $3.86.
Lambda Physik AG changed hands at 60 euros on its first day of trading on the Neuer Markt after
opening at 56. The German maker of industrial lasers yesterday priced its offering of 3.4 million
shares at 35 euros each, the top of the range used to canvass investor interest. |
