Cable & Wireless issues sales warning and share prices crash |
|
|
Published
:
Sun, 09 Oct 2005 20:35
|
LONDON: Britain's second largest fixed line telecom company Cable & Wireless issued a sales warning Friday sending its share prices on a major slump and bringing down its market cap by almost a fifth. The company warned it expected a 6 per cent drop in first-half revenue at its U.K. business.
The FTSE 100 company's shares were being sold at 119 pence (at one time they touched 116-1/4 pence), the lowest since January this year. Some 290 million shares have changed hands, four times the normal daily rate.
The company estimated that its total revenue from the U.K. business will fall to 765 million pounds for the half year ending September 30 from 810 million a year earlier. It also said retail revenue from sales of telecom services to businesses fell 13 per cent to 375 million pounds, whereas carrier revenues from selling wholesale capacity rose 3 per cent. The company had slashed thousands of jobs and had pulled out of businesses in the U.S. and Japan.
The fall in share prices had wiped out its gains against rivals in Europe this year. Prior to the sales warning, the company's shares had outperformed European peers by at least 18 per cent.
The 133-year-old company, which had been facing crisis after crisis, had reported its first net profit in three years last year. It had been restructuring its U.K. business and had acquired a smaller rival Energis for 674 million pounds.
Cable & Wireless has been maintaining that its National Telcos unit, operating mostly in the Caribbean, had been performing well. At the same time, it said it had also seen some loss of momentum in sales planning since the announcement of the Energis deal.
Analysts feel the company will have to consolidate and the only way is to acquire other companies. This will improve the worsening cash flow situation.
A company spokesperson later on Friday said the price fall is an "over-reaction". Describing it as an evolutionary process, she said the company is not losing customers and this is a transition phase as the clients migrate to single internet providers for all their voice and data traffic.
|
|
|
|
|
|
Print this Story
