London, July 4 (Bloomberg) -- European stocks fell for a second day after Marconi Plc, the U.K.'s largest phone-equipment maker, asked for its shares to be suspended pending a statement about its prospects. Rivals Alcatel SA, Nokia Oyj and Ericsson AB all dropped more than three percent.
``When something like this happens people assume the worst and everything is weaker,'' said Mark Denham, who helps oversee about 33 billion pounds ($46 billion) at Clerical Medical Investment Group Ltd. ``The bad news is coming in wave after wave.''
KLM Royal Dutch Airlines NV declined after Europe's fourth- largest airline said it expects first-quarter operating profit will be ``substantially'' lower than last year.
The Dow Jones Europe Stoxx 50 index shed 22.97 points, or 0.6 percent, to 4039.20, bringing its two-day decline to 2.3 percent. Benchmark indexes in Europe's eight largest markets fell, with those in Spain and Sweden dropping by more than 1 percent.
Ericsson, the No. 1 phone-equipment maker, dropped 4 Swedish kronor, or 6.6 percent, to 57. Alcatel, Europe's fourth largest, fell 1.85 euros, or 7.5 percent, to 22.9 and Nokia, the No. 1 wireless handset maker, shed 85 cents, or 3.2 percent, to 25.75 euros.
Marconi shares were suspended all day pending a statement by the company on its recent performance and the outlook for the rest of the year. The company asked the leader of its biggest union to attend a board meeting at 5 p.m. London time.
Morgan Stanley Dean Witter & Co. cut its share price and earnings forecasts for Marconi yesterday after U.S. rivals including Nortel Networks Inc. reported falling sales and rising losses last month on slack demand for their products.
Marconi said it sold its medical systems unit to Royal Philips Electronics NV. The price was lower than some analysts expected.
``The deal values the division at $1.1 billion, or some 25 percent below our target of $1.5 billion,'' said David Seban- Jeantet, an analyst at ABN Amro in London who rates the shares ``hold'' in a note to investors. The sale will reduce Marconi's earnings per share this year by 13 percent and 11.5 percent in 2002, the analyst estimated.
Fibernet Group Plc, the U.K. designer of fiber optic networks, fell 32.5p, or 7.9 percent, to 377.5. Alcatel Optronics, the fiber-optic unit of Alcatel, fell 96 cents, or 6.9 percent, to 12.94 euros and Bookham Technology Plc, a U.K. fiber-optic equipment maker, dropped 17.5p, or 8.8 percent, to 182.5.
`Dim Prospects'
``Due to the position of Marconi in fiber optics it might be that they confirm the dim prospects for the sector,'' said Michel Cretier, senior equity analyst at Pictet & Cie, which oversees about $80 billion in stocks and bonds worldwide. ``There's a glut in fiber optical equipment -- no question.''
Telemetrix Plc slumped 31p, or 24 percent, to 100. The maker of chips and wireless network testing equipment said sales at its Zetex semiconductor unit fell below expectations.
``Telemetrix's a small company, but a bellwether that gives a clue to what's happening in the industry,'' said Peter Cogliatti, a trader at Williams de Broe in London.
Spirent Plc, the U.K. maker of communications-testing equipment, fell 20p, or 9 percent, to 202.
The Bloomberg 500 Telecom Equipment index has dropped 50 percent this year, making it the worst performing industry among the 37 industry groups in the Bloomberg European 500 index.
``I've said in the past `it can't go lower than this' but I've been proved wrong,'' said Clerical Medical's Denham. ``It's hard to value these companies because the outlook for earnings and sales is so uncertain.'''
Articon-Integralis AG slumped 7.10 euros, or 39 percent, to 11.10. Germany's biggest maker of computer network security systems said preliminary second-quarter sales were worse than expected as companies put off investing in information technology.
KLM fell 85 cents, or 4.1 percent, to 20.10. It said fiscal first-quarter operating profit will be ``substantially below'' the same period last year as the company filled less passenger and cargo space.
British Airways Plc fell 6p, or 1.7 percent, to 343. The largest European carrier said June passenger traffic fell 8.9 percent, hurt by slow economic growth in the U.S., though the drop was smaller than in April and May. Deutsche Lufthansa AG, the No. 2 carrier in the region, slid 38 cents, or 2 percent, to 18.72 euros.
Vodafone Falls
Vodafone Group Plc fell 4.5p, or 2.8 percent, to 157.5. Banco Santander Central Hispano SA said it cut its stake in the No. 1 wireless network operator to 1.62 percent from 2.71 percent -- days after the Spanish bank said it had no immediate plans to sell its shares in the company.
``Vodafone's a bit weaker after the BSCH statement, which came as a surprise,'' said Cogliatti.
BP, the third-largest publicly traded oil company, gained 10p, or 1.7 percent, to 584. Eni SpA, Italy's largest oil company, advanced 30 cents, or 2.1 percent, to 14.27 euros and Total Fina Elf SA, France's No. 1 oil company, gained 2 euros, or 1.3 percent, to 161.7.
Crude oil rose 1.3 percent after a report showed record U.S. gasoline demand before the U.S. Independence Day holiday today, easing concern a slowdown in the economy is hurting travel.
The American Petroleum Institute survey came yesterday after the Organization of Petroleum Exporting Countries said it won't raise production.
Dimension Data Holdings Plc fell 28p, or 15 percent, to 161, its record low, extending yesterday's 29 percent decline. South Africa's largest computer services company was cut to ``reduce'' from ``hold'' by analyst Will Wallis at UBS Warburg. The company moved its listing to London a year ago.
Guardian IT Plc slumped 112.5p, or 18 percent, to 500 after house broker UBS Warburg lowered its share price and revenue forecasts for the computer services company.
Telindus Group NV, dropped 1.44 euros, or 14 percent, to 8.61, their lowest level in more than four years, after two analysts downgraded the stock amid concern the Belgian communications network maker won't reach its sales and profit forecasts for this year.
Concern Grows
Concern that Telindus may not meet its forecasts grew after rival Dimension Data said yesterday declining sales from a slowing economy in the U.S. and Europe will cut second-half profit, analysts said. |
