European Closing Update: Ericsson Casts Cloud Over Sunny Europe
LONDON -- Europe may be basking in glorious weather at the moment (yes, even the U.K.), but its rays singularly failed to warm up the market.
The die was cast from the open, when Swedish mobile phone maker
Ericsson
(ERICY)
reported slightly weaker than forecast second-quarter results and said that it had reduced its outlook for the third quarter because of component shortages in its handset business sector.
Ericsson shed 19.00 kronor, or 9.4%, to 183.00 ($20.36), which dragged down other telecom companies such as
Alcatel
(ALA)
, down 0.95 euros, or 1.2%, to 77.65 ($72.44), and
Vodafone AirTouch
(VOD) - Get Report
, down 11p, or 3.6%, to 296 ($4.50).
The fall in Vodafone was enough to knock around 30 points of the
FTSE 100
, which closed down 94.4 points, or 1.4%, at 6,374.6. The
Techmark
hovered in positive territory for most of the session and closes up 10.9, or 0.3%, at 3,754.1.
Energis
(ENGSY)
bucked the telecom trend, rising 16p, or 2.3%, to 595. The advanced voice and data telecom network provider continues to benefit from its tie up with mobile operator
Orange
, which was announced earlier in the week. The deal will allow Energis to provide integrated fixed and mobile services to its customers.
Drug stocks continued to look dopey following a vote earlier this week by the U.S. Senate to allow imports of cheaper prescription drugs.
AstraZeneca
fell 57p, or 1.7%, to
28.43,
Glaxo Wellcome
(GLX)
shed 40p, or 2.0%, to
17.80 and
SmithKline Beecham
(SBH) - Get Report
fell 18p, or 1.2%, to 803.
Cable operator
Telewest Communications
(TWSTY)
fell 23p, or 8.9%, to 235 after it announced that a shortage of set-top boxes has forced it to suspend marketing its digital services. A downgrade by
HSBC
didn't help matters.
Media companies
Carlton
and
United News & Media
decided finally to off their merger after the U.K. government said it would allow the merger to go through only if the companies sell of a major TV franchise. This leaves the way open for the other major media company
Granada Media
to either woo or make a hostile bid for United.
Granada's shares fell 29p, or 3.2%, to 579 on concerns that the company will issue paper to pay for the deal, United rose 14p, or 1.5%, on the bid talk to 958, and Carlton shed 18p, or 2.2%, to 802.
Europe's other major stock markets also ended lower, dragged down by the weak telecom shares. The
CAC 40
in Paris closed down 99.7, or 1.5%, at 6,464.1. Late in the German trading session, the
Xetra Dax
in Frankfurt was down 86.2, or 1.2%, to 7,394.0 and the Neuer Markt's tech-heavy
Nemax 50
index was 128.3 lower, or 2%, at 6,288.7.
Deutsche Telekom
(DT) - Get Report
was the biggest drag on the Dax, as investors fretted that it was on the verge of paying far too much for U.S. wireless operator
VoiceStream
(VSTR)
. Late in the day, DT was down 1.77 euros, or 3.1%, at 55.40.
Elsewhere in European telecoms,
France Telecom
(FTE)
fell 5.00 euros, or 3.4%, to 142.50 and
Telefonica
(TEF) - Get Report
closed down 0.39 euros, or 0.4%, to 24.51, after presenting a formal takeover over for the Dutch entertainment firm and creator of the Big Brother reality TV show
Endemol
.
In Frankfurt, software maker
SAP
(SAP) - Get Report
was down 2.01 euros, or 0.8%, to 247.50, pairing gains made Thursday after better-than-expected second quarter results.
