Newspaper article The Evening Standard (London, England)

Marconi Falls as Rival Nortel Warns Again

Newspaper article The Evening Standard (London, England)

Marconi Falls as Rival Nortel Warns Again

Article excerpt


CITY fears that Marconi may be on the verge of issuing a profits alert intensified overnight as US telecoms equipment rival Nortel issued its second warning in six months and announced plans to shed 5000 jobs.

Marconi was one of the biggest fallers among the top 100 companies today, shedding 20p, or almost 5%, to 390p. Only last week, the company's joint broker, Credit Suisse First Boston, slashed its profits forecast for the current year from [pound]885 million to [pound]797 million. It also reduced its numbers for next year from [pound]1.1 billion to [pound]1 billion.

The slowdown in telecom markets has rattled analysts. Yesterday, Swedish phones giant Ericsson said it was slashing 1150 jobs in Britain with the closure of two plants, at Scunthorpe in Lincolnshire and Carlton in Nottinghamshire, to restore profitability at its telephone handsets division.

Marconi's share price has slumped from a peak of 1250p last year and brokers are convinced the group will soon be forced to follow the lead of its peers and scale back its expectations.

But it was not the only casualty. ARM Holdings, which designs the microchips used in many mobile phones, also tumbled 163/4p to 3311/4p after bearish noises about the microchip industry from broker ABN Amro. Rival HSBC is also downbeat about short-term prospects for ARM itself. Psion was another faller, losing 133/4p to 1163/4p in the wake of a profits warning from its biggest rival, Palm, in the US overnight.

Telecom shares in general were marked lower following accusations that the mobile phone operators had paid well over the odds for 3G licences that were unlikely to attract strong demand from consumers anyway. Vodafone shaded 41/4p to 2081/2p on talk that it has fallen out with its American partner Verizon Wireless. …

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