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Stock markets in New York show record one-day gains | Alcatel intensifies its restructuring as sales tumble
The Irish Times reports that a rally in New York stock markets has helped Dublin to soften losses as the ISEQ dipped to its lowest level since 1998. Bargain-hunting bulls on Wall Street drove prices up from their lowest levels in half a decade on Wednesday, and the Dow Jones Industrial Index recorded its heaviest trading day ever, closing up 6.35 percent. The Nasdaq surged 61 points to 1,290, a 5 percent gain. The gains in New York helped Dublin make the best of a very bad day, during which stocks lost EUR2.2 billion. The ISEQ fell to levels not seen since October 1998 before rallying to close down 3.69 percent.
The Irish Independent says that telephone directory assistance company Conduit is considering taking a full listing on the Irish Stock Market. Conduit is currently listed on the technology-dominated ITEQ market in Dublin, so upgrading to the official list would not be a major obstacle, according to chief executive Liam Young. He added that no final decision had been taken, but a dual listing in Dublin and London was under active consideration. Read more about Conduit on ElectricNews.Net.
The same paper says that three members of troubled cable operator Adelphia Communication's founding family were arrested in New York on federal charges, as reported by ElectricNews.Net.
According to the Financial Times, French telecoms equipment group Alcatel reported a net loss and a 33 percent decline in sales when it announced its second-quarter results. For the three months to 30 June, Alcatel posted a net loss of EUR1.4 billion, compared with a loss of EUR3.1 billion in the same period last year. Losses per share fell from EUR2.74 to EUR1.20. Sales fell by a third, from EUR6.3 billion to EUR4.2 billion, but were flat compared to first-quarter sales of EUR4.3 billion. Chief executive Serge Tchuruk said Alcatel had intensified its restructuring programme following deterioration in the market. "Alcatel expects to stay depressed in the second half of 2002, with no sign of recovery in view," he added.
The same paper says that Colt Telecom reported that both turnover and core earnings had exceeded expectations for a second consecutive quarter. Colt said earnings before interest, tax, depreciation and amortisation (EBITDA) reached STG14.7 million in the second quarter, compared with STG9.8 million in the previous quarter. The UK-based company also announced that Steve Akin, a senior manager at Fidelity Investments, would replace Peter Manning as chief executive.
The paper also says that IT services group Cap Gemini Ernst & Young reported a bigger than expected drop in operating margins in the first half of the year. The French group said interim operating profits, excluding the cost of its latest restructuring programme, fell to EUR10 million, compared with EUR269 million in the same period last year. That represents a slide in operating margins to about 0.3 percent, compared with the 3 percent expected by analysts. Pro forma revenues fell 14.5 percent from EUR4.44 billion to EUR3.73 billion, excluding currency fluctuations. The group warned that market conditions remained "difficult and relatively unpredictable."
The Wall Street Journal reports that AOL Time Warner posted surprisingly solid second-quarter earnings but admitted that its accounting practices are being examined by the Securities and Exchange Commission. AOL said net income swung to USD394 million in the second quarter, or USD0.09 a share, compared with a net loss of USD734 million, or USD0.17 a share, in the year-earlier quarter. AOL disclosed that the SEC is conducting a "fact-finding" inquiry into its accounting practices, in the wake of a recent Washington Post article that raised questions about a series of transactions by America Online in 2000 and 2001.
The same paper says that net income edged up 5.3 percent in the second quarter at Electronic Data Systems, despite the problems of WorldCom, one of its largest customers and suppliers. EDS, the world's No. 2 computer-services company, earned USD316 million, or USD0.64 a share, compared with USD300 million, or USD0.62 a share, a year earlier. The latest figure includes a pre-tax charge of USD101 million, or USD0.14 a share, to write off WorldCom receivables and to establish a reserve against future WorldCom-related losses.
The paper also says that dissident investor Sam Wyly has been given USD10 million by Computer Associates in return for abandoning his proxy battle with the software manufacturer. Wyly, who had advocated board independence and railed against big payments to executives as he fought to unseat members of the Computer Associates board, pledged not to launch any takeover battles or proxy fights for five years. Computer Associates, which is undergoing a federal investigation of its accounting, agreed to add an independent director to its 11-member board shortly after the company's annual meeting on 28 August.
According to Bloomberg, shares in Spanish phone company Telefonica rose as much as 16 percent after the firm suspended its mobile business in Germany. Telefonica shares rose EUR1.36 to EUR9.68 after the company's decision to suspend its Group 3G business in Germany and write down EUR4.8 billion for its wireless businesses in four European countries. The writedown for the wireless units in Germany, Italy, Switzerland and Austria led to Telefonica's first ever loss of EUR5.7 billion, or EUR1.17 a share, in the second quarter, compared with a profit of EUR716.7 million, or EUR0.15 a share, in the year-ago period. Analysts had said that Telefonica would never make money in Germany because there are too many competitors.
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