Market report: Wednesday close

By MICKEY CLARK FOR MAILONLINE
Updated:

 

CITY fears that Marconi may be about to issue a profits alert intensified overnight as US telecoms equipment rival Nortel gave its second warning in six months and revealed plans to shed 5,000 jobs.

Marconi was one of the biggest fallers among the top 100 companies, shedding 40p to 370p. The company's joint broker, Credit Suisse First Boston, last week slashed its current-year profits forecast from £885m to £797m. It also cut its numbers for next year from £1.1bn to £1bn. The slowdown in telecoms markets has rattled analysts. Swedish phones giant Ericsson said on Tuesday that it was axeing 1,150 jobs in Britain with the closure of two plants, at Scunthorpe in Humberside 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. ARM Holdings, which designs the microchips used in many mobile phones, tumbled 32 1/2p to 315 1/2p after bearish noises about the microchip industry from broker ABN Amro. Rival HSBC is also downbeat about short-term prospects for ARM itself. Psion lost 13p to 117 1/2p after a profits warning from its biggest rival, Palm of the US.

Telecoms shares 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 lost 9p at 204p on news of a split with US partner Verizon Wireless. There were also losses for British Telecom, down 24 1/2p to 523p, Telewest, off 3p to 120p, and Colt Telecom, 86p lower at 824p. Share prices continued to lose ground throughout the session as London braced itself for big opening falls on Wall Street and Nasdaq in the wake of those profit warnings from Nortel and Palm. The FTSE 100 index fell 114.1 to 5614.

Overnight one income fund bought 640,000 shares in CGNU at 1033p when the ruling price was 988p. Today CGNU nursed a fall of 67p at 966p as the shares went ex the 23.75p dividend. Marks & Spencer lost 1/2p to 249p. The robustness of the shares has worried brokers such as Credit Lyonnais Securities, which was again telling clients they were only worth between 180p and 200p.

Revived takeover talk lifted Elementis 11 1/2p to 89p. The chemicals group first said it was in bid talks last June.

Huntingdon Life Sciences fell 2p to 3 1/2p before pulling back to 5 1/2p after both market-makers in the shares withdrew. Winterflood Securities said it had received threats from animal rights activists. Dresdner Kleinwort Wasserstein later said it would not act as sole market-maker for any company.

AIM-quoted Maclellan Group, which used to trade as Jordec, jumped 7p to 58 1/2p as it celebrated a contract with Mapeley to manage 330 facilities for 40,000 Customs & Excise and Inland Revenue staff in a deal worth £100m over seven years.

• Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed on the site.

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