Europe's leading technology companies were sharply lower yesterday after bad news from Cisco of the US and Philips Electronics.
Philips, Europe's largest maker of consumer electronics goods and number three in semiconductors, tumbled 9.8 per cent to €29.14 after announcing it expected to make a loss in the second quarter. It also said it would cut 7,000 of its 220,000 jobs, with details of how and where to be announced shortly. Philips disappointed analysts by reporting first quarter profits of €53 million rather than a consensus expectation of €275 million.
At one point the shares were down more than 15 per cent, taking them to their lowest intraday level since November 1999. Trading in the shares accounted for a third of the volume on the Amsterdam stock exchange.
Ericsson fell as much as 7 per cent following reports that it is likely to announce another 6,000 job cuts. The shares later rallied somewhat to end 5 per cent down at 57.50 Swedish krona. Ericsson reports its first quarter results on Friday. Last month it lowered its guidance on the revenues, saying it expected them to be flat or a little lower than the same quarter of 2000.
Nokia, which also reports on Friday, fell 4.8 per cent to €28.70. Alcatel was down more than 10 per cent at one stage and its shares were suspended, but ended 6.75 per cent lower at €33.57.
Telecom companies were also lower, although less sharply. Deutsche Telekom fell 4 per cent to €27.51 and Sonera lost 4.4 per cent to €9.70 but France Telecom was off just 0.3 per cent at €75.40. Battered Dutch cable company UPC rose 7.7 per cent to €5.75, although with its share price highly volatile recently it was difficult to read much significance into the rise.
Sweden's Assa Abloy, the world's largest lock-maker, extended recent strong gains as it took another step in its global expansion plan. The shares, which jumped 7.7 per cent to SKr161 as the group unveiled a joint venture with Canada's United Dominion Industries, have climbed 30 per cent over the last three weeks.
France's Valeo dropped 3.7 per cent to 46.58 after the motor components manufacturer posted an unexpected net loss for the first quarter, and said it could not rule out plant closures in Europe. Goldman Sachs described the results as "little short of disastrous", while UBS Warburg said: "It's crisis time."
ING edged 0.3 per cent higher to €77.50 as Deutsche Bank removed the stock from its European Focus List, but said the company remained its top pick in the pan Euro insurance sector. Munich Re lost 4 per cent to €317.65.