BERLIN -- Funny that the share prices of the world's leading technology and telecommunications firms resemble one of the lowest tech objects man has ever invented: the yo-yo.
But they do, and investors could see some rather low-tech gyrations from the likes of Europe's biggest names in tech, media and telcos, or TMT, next week.
Two of the biggest culprits for wild TMT swings over the past couple of days, which could likely spill over into the coming week, are a slump by Swedish telco equipment leader
on Friday and a surge by software maker
on Thursday. On Friday Ericsson closed down 19 kronor, or 9.4%, to 183 ($20.36) and SAP ended down 1.89 euros, or 0.8%, to 247.62 ($231.01).
Both are sector heavyweights, and while SAP's move higher on better-than-expected second-quarter earnings helped lift tech shares across Europe, Ericsson's warning of lower expected profit in the coming months helped caused markets from Stockholm to Frankfurt sell off as telcos tanked all over the place. But more action is on the way and international mutual funds which favor TMT shares, such as the
JP Morgan European Equity fund and the
Merrill Lynch Euro A fund, are bound to be affected. "I don't think things are going to settle down any," says one trader in Frankfurt.
Key for sector sentiment will be the third-quarter results of German tech giant
(SMAWY:OTC BB), due to be released on Wednesday. At the moment, things look good: Net profit is expected to double to roughly 660 million euros, boosted by a good performance by semiconductor subsidiary
, but it's impossible to say whether the company's shares will surge over 13% like SAP's did last week. On Friday, Siemens fell 3 euros, or 1.7%, to 175.
"Considering the good way business is continuing to develop and
the weak euro, odds are Siemens will have a strong quarter," says Klaus Repges, an analyst for
in Duesseldorf. Repges rates Siemens outperform.
Amid all the TMT shenanigans, at least one Old Economy stock will try to muscle Siemens and its tech brethren out of the spotlight, when
holds its half-year press conference on Wednesday in Stuttgart.
But the only other sector likely to have a chance next week to compete with techs and telcos for investors' interest will be the Continent's financial issues. Reports that
is in takeover talks with
Bank of Austria
got things riled up in Central Europe on Friday.
Any deal between Austria's largest and Germany's second-largest banks could hasten the merger of
(DRSDY:OTC BB) and
(CRZBY:OTC BB), numbers three and four, respectively, in Germany. Last week, a Dresdner memo circulated mentioning that the banks had not yet entered formal negotiations, but discussions continued apace. Naturally, things haven't been quite as smooth in the talks between the two banks as Dresdner would like its employees to believe.
And come to think of it, the performance of German bank stocks may not have quite the yo-yo-like quality of their TMT counterparts, but alliances in the sector certainly seem to have a healthy dose of back-and-forth.