CyberWorks dips on C&W sale fears
Thursday, March 15, 2001
BEN KWOK and AUDREY SNEE
Pacific Century CyberWorks' share price fell 3.09 per cent yesterday on concerns Cable & Wireless (C&W) might be under increasing pressure to dispose of some of its holding in the company, according to brokers.
CyberWorks ended at HK$3.92 yesterday.
Worries about the CyberWorks share sale increased after the British-based company said on Tuesday it would report lower than expected pre-exceptional earnings per share of 14 pence to 16 pence in the year to March 31.
It also planned to slash 4,000 jobs in the United States and Japan in the next 12 months.
C&W is allowed to dispose of up to half of its 14.9 per cent stake in CyberWorks before March 28, when the SAR company will announce results.
Analysts said C&W might need to raise more cash for its core business, and a quick disposal of a portion of its CyberWorks holding could be a strong possibility.
At CyberWorks' present share price, Credit Lyonnais Securities Asia analyst Edison Lee said C&W could realise HK$12.8 billion from its CyberWorks stake, or about 3 per cent of its net asset value.
C&W official Peter Eustace said the company's profit warning had no bearing on its CyberWorks holding. When asked whether the firm was actively looking for a buyer for its 14.9 per cent CyberWorks' stake he added: "I am not in a position to comment."
The lock-in period for half of C&W's remaining holdings in CyberWorks expired in mid-February without a sale going ahead or any buyers coming forward.
But analysts said despite the huge losses in C&W's share price in the past two days, the company was still in a strong position with its large cash reserves and would be under no pressure to sell its CyberWorks stake.
"It will not change anything one iota. They can sell at any time and have been fairly open about the fact that they will sell when they see the right opportunity," said Steve Malcolm, telecoms analyst at Deutsche Bank.
"Everyone knows that they want to reduce their holdings in PCCW [CyberWorks] at some stage, but they will not be held over a barrel. Time is not the most crucial factor," said James Ross at ABN Amro.
After falling 20 per cent on Tuesday, C&W stock continued sliding yesterday, down another 11 per cent in morning trade to a three-year low of 481 pence, evaporating earlier gains of other telecoms stocks in the sector.
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