A new storm on the telecom : Marconi drifts

The security of the British equipment manufacturer collapsed on Thursday at London Stock Exchange (-54.08%), entailing the collapse of Alcatel (-11.35 %). After the United States, it is the turn of Europe.

Bad news for the telecom sector : the historic collapse of Marconi’s security, one of the five big worldwide telecom equipment manufacturers, on Thursday July 5th at London Stock Exchange. After launching a “profit warning” on Wednesday July 4th (the quotation was suspended in London all day long on Wednesday), the security collapsed since the opening on Thursday July 5th at London Stock Exchange. It has lost 54.05% at the closure, now worth 112.5 pence compared to 245 on its previous quotation on Tuesday July 3rd.The collapse is all the more impressive when you know that, at the beginning of 2000, the security of the former GEC conglomerate was worth 12 pounds and had already lost 90% of its value before the collapse.The disaster also in EuropeWhat is the reason of the collapse of Marconi’s security ? The revelation of a slowdown in activities in Europe more important than expected. Thus Marconi announced a 15% decrease of sales compared to the previous fiscal year, an operating income for the current period which is half inferior compared to the previous one (the fiscal year has just began and will end on March 31st 2002). The company proceeded to an exceptional expenditure worth 550 million pounds (916.7 million euros) in total for the period.At the same time, 4,000 lay-offs were announced (about 10% of the total workforce), in addition to the 3,000 lay-offs decided last April. For operators, shaken not that long ago by the “profit warning” of Nortel and the spectacular losses of the Canadian equipment manufacturer, the message was clear: it is also the disaster in Europe.The turn of AlcatelAs a consequence, Alcatel faced a new loss at Paris Stock Exchange. The security was very low at the closure (-11.35% at 20.3 euros) after navigating in the red all day long. Analysts (see on Boursorama.com the article untitled "The collapse of Alcatel due to the announces of Marconi, bad perspectives") explain that Marconi’s warning directly affects Alcatel because the two groups are very present in Europe and they are in competition on the market of transmission equipments…Alcatel, the favourite security among French people, had reached a higher stock exchange historic value at 97.05 euros on September 4th 2000. It was around 40 euros in March 2001 and reached another low level around 21 euros on July 5th at mid-day. After the North Americans, Lucent, Nortel, and Cisco, it is now European equipment manufacturers who begin to face a collapse! However, nobody really knows when it will be over and when there will be the inevitable recovery. Moreover, investors are all the more disoriented than a few days ago, financial analysis were far from the situation discovered on Wednesday night…