Market report: Friday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

SHARES in troubled telecoms group Energis were teetering on the brink after slumping 1p to a new low of 3p, having briefly touched 2p.

Deutsche Bank pulled no punches, telling clients the shares were worth 'zero'. Analyst Stephen Malcolm said: 'The story for equity holders is over - if you can, get out.' Standard & Poor's reduced its rating from BB minus to CCC minus, or lower junk-bond status.

A massive 250m shares changed hands but, just as happened yesterday, it was all one-way traffic with not a supporter in sight. The group continues to talk to its banks, hoping to find a way of restructuring its £ 1.2bn debt.

National Grid,its biggest backer with 33% of the shares, has washed its hands of the affair and now faces a big writedown on its remaining investment.

This week alone, the price of Energis shares has tumbled more than 75%, wiping £174m from the stock market value. It is now capitalised at only £47.8m. Energis was demerged from National Grid, down 10 1/2p at 451 3/4p, in 1997 and by early 2000 was commanding a price tag of almost £14bn.

The market is full of stories of private punters who have taken a huge hit. One saw the price plunge from a peak of almost 800p to 80p, where he thought it had reached the bottom. He now knows better.

The circuit-breakers were triggered in Marconi, with trading briefly suspended as the price touched 14p. It later reduced the deficit to 2 3/4p at 16 3/4p on turnover of more than 86 million shares. Dealers blamed a 9% fall in the value of Cisco Systems overnight in the US.

The fallout from Energis and Marconi sent shockwaves through the rest of the sector. Losses were also seen in Thus, down 3p or 11% to 20p, Telewest, off 1 3/4p at 17p, and Carphone Warehouse, 5 3/4p worse at 75 1/4p.

Colt Telecom was another casualty, dropping 7p to 37p as brokers continued to reflect on yesterday's profits warning. US securities house Lehman Brothers has moved from perform to underperform and slashed its target price from 111p to 15p. Rival broker Merrill Lynch is bearish, lowering its recommendation from neutral to reduce/sell. Merrill says things are likely to get worse before they get better. Morgan Stanley has halved its target price to 150p, but keeps its outperform rating.

Another rocky ride for the Dow Jones in the US yesterday set the tone for trading in London. As the bears regained the upper hand, the FTSE 100 index closed down 22.5 at 5050.8. Big turnover in the likes of Energis, Colt, Marconi and Vodafone, down 2 1/2p at 125 1/4p, accounted for much of the total number of shares traded. Vodafone was undermined by unconfirmed reports that US securities house Goldman Sachs had reduced its target price from 240p to 200p.

Anite lost an early lead to trade up 1/2p at 124p despite the company issuing an upbeat trading statement to counter market worries. The European consultancy and services software specialist is confident it can continue to outperform its sector.

Further reflection on yesterday's results from Abbey National saw the price dip 24 1/2p to 970p. Morgan Stanley has dropped from outperform to neutral. It warns retail banking expenses are expected to rise faster than inflation over the next year.

• Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed in the tables. Ofex prices relate to the previous close.

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Today's gainers and fallers
Geoff Foster of the Daily Mail on yesterday's trading

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