MARKET REPORT: MARCONI PUNISHED AGAIN FOR KEEPING BROKERS IN THE DARK
2001-03-31
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THE PROSPECT of a trading statement from Marconi was as far away as ever last night after another broker downgraded its forecasts and one more was believed to be considering doing so next week.
The telecoms equipment maker's financial year ends tomorrow, and its shares were being punished again yesterday for the lack of visibility surrounding the company. But there's no obligation on Marconi to give the market the guidance it is demanding unless results will miss expectations substantially.
Ironically, market expectations may have come down far enough for Marconi to feel confident of meeting the average of analysts' forecast. Deutsche Bank cut its earnings per share prediction for the 12 months to the end of March by 7 per cent yesterday, citing the dramatic reduction in telecoms industry spending that has caused a rash of profit warnings. It cut its 2002 figure by 18 per cent.
One other leading broker was yesterday known to be discussing slashing its 2002 forecast by 17 per cent, predicting profits could even shrink. Investors remain in the dark, and the push-me, pull-you of their guesswork ensured huge volume in Marconi yesterday. Almost 37 million shares changed hands and, with Nasdaq sliding, the bears won out. The stock ended at 355p, off 18p.
Falling telecoms-related issues again bled the FTSE 100, which ended 25.6 in the red at 5,588.45. The FTSE techMARK 100 closed off 36.94 at 1,943.22. Marconi's sectormate Spirent was 21.75p weaker at 362.25p, while Misys (off 29p at 508p) and CMG (down 28.25p to 638p) were also among the casualties.
It would have been worse but for a strong rebound by the Dow Jones just as Londond was closing. Marks & Spencer's recovery plan put it atop the FTSE 100 leaderboard, jumping 17.5p to 266.5p. And the recent strength of UK retail sales kept the wider retail sector in focus, with Safeway up 9.25p to 326p, Great Universal Stores up 14p to 481p and Boots, the chemists, gaining 12p to 631p.
Much business was generated by the expiry yesterday of the lock-in period for pre-IPO investors in Arc International, the chip designer. It ensured the busiest day's trading in the stock since its flotation at 210p last September. The pre-IPO investors had got in around 90p a share and many, mainly high net worth individuals, were booking what little profit remained yesterday. Arc shares were driven down 10p to 98p. Sources close to Apax, the private equity investor, were last night claiming it remained committed to its 7 per cent shareholding. Software group Autonomy, which Apax baled out of last month, was down another 98p to 667p yesterday. Enic, which has permission to sell its holding of 3.5 million Autonomy shares, was off 7.5p at 57.5p after results.
Speculation was swirling throughout the morning that Intec Telecom Systems was preparing a profit warning, knocking a third off the value of the company by lunch. Then came the warning - telecoms operators are, surprise surprise, delaying investment decisions to Intec's detriment - and the shares fell another third. The company refused to accept that its list of prospective contracts will not turn into firm orders and so refused to cut its overheads. The shares ended 129p lower at 72.5p.
Biotechnology proved one of the brighter New Economy sectors yesterday as investors reasoned it is relatively insulated from the economic gloom. Cambridge Antibody Trust jumped 287.5p to 1,975p on a development deal with Weston Medical. Weston shares were up 11p to 186p after better-than- expected results. Shire Pharmaceuticals was up 37p to 1,137p after Canadian regulators put new obstacles in the way of its all-share acquisition of BioChem.
Venture capitalist group Alchemy was in the market trying to snap up shares in Novara, the loss-making school equipment firm which it wants to take private at 28p a share. Alchemy head John Moulton rejected suggestions that Eaglet, a dissenting shareholder, could stop him taking control and said Novara needed a quick sale after reaching its overdraft limit. Eaglet can hold its 10 per cent stake "until hell freezes over", he said. But Findel, a retailer, said it was considering a rival bid, sending Novara shares up 3p to 31.5p. Findel was unchanged at 222.5p; Eaglet, an investment trust, was off 4.5p at 400p.
Loftus Road, corporate home of the QPR football and Wasps rugby teams, was unchanged at 3.5p, a record low, on fears that forthcoming interims will show another hefty loss. Chairman Chris Wright lent the company another pounds 550,000 for working capital yesterday, taking the total to pounds 6.5m in the past nine months.
SEAQ TRADES: 123,339
SEAQ VOLUME: 2.03bn
s.foley@independent.co.uk
With the retail punter in hibernation and small-cap brokers fearing for their jobs, one big shareholder was selling Hemscott.net yesterday. The firm, which runs a loss-making website and provides business information services, crashed 0.26p to 0.55p - the day's worst share price performance.
The company, whose stock has plumbed new depths this month, came in for vocal criticism from punters at a recent small investor fair.
MARKET MOVERS
Ascot 390p (up 46p, 13.4 per cent). Agrees Dow Chemical bid at 400p.
British American Tobacco 534.5p (up 14.5p, 2.8 per cent). Goldman Sachs advises switching from Imperial Tobacco.
Egg 155p (up 8p, 5.4 per cent). Technical analysts say stock's outperformance is set to continue.
FI Group 350p (up 17.5p, 5.3 per cent). Defies sector gloom with news trading is in line with expectations.
First Technology 391p (up 28.5p, 7.9 per cent). Chairman's wife tops up her holding of the stock.
Hardy Underwriting 125.5p (up 14p, 12.6 per cent). Profits jump as insurance market improves.
Lady In Leisure 22p (up 5p, 29.4 per cent). Speculation it could yet find a buyer for its assets or the whole company.
NSB Retail Systems 52p (up 5.5p, 11.8 per cent). High volume sparks rumours of stakebuilding.
Poptones 2.25p (up 2.5p, 12.5 per cent). Results show it has signed 22 bands.
Royal Bank of Scotland 1,567p (up 62p, 4.1 per cent). Pick of the sector, say Schroder Salomon Smith Barney and UBS Warburg.
Surgical Innovations 2.25p (up 0.5p, 28.6 per cent). Positive response to confirmation it's broken even.
Synigence 35.5p (up 3.5p, 10.9 per cent). On target for 50 per cent of GPs on its system by summer.
Airtours 274p (down 14p, 4.9 per cent). Office of Fair Trading threatens legal action in investigation over cancellation fees.
Amvescap 992p (down 71p, 6.7 per cent). Back on down tack after equity market rally petered out.
Colt Telecom 770p (down 54p, 6.6 per cent). Speculation of more share sales by Fidelity.
J Cropper 175p (down 40p, 18.6 per cent). Profit warning in paper unit.
Kingfisher Leisure 55.5p (down 14.5p, 20.7 per cent). Says that bid talks have collapsed.
Po Na Na 90p (down 25p, 21.7 per cent). Trading at its Hammersmith bar is disappointing.
Redbus Interhouse 82p (down 21.5p, 20.8 per cent). Caution on prospect for internet hotels in economic downturn.
Sage 255p (down 13.5p, 5.0 per cent). Lukewarm response to its acquisition of Interact in the US.
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