Europe's technology companies proved once again that they have not yet reached the bottom of the market as more bad corporate news pounded share prices.
Yesterday's leading victim was Cap Gemini Ernst & Young, the French-based IT and management consultancy group. Shares tumbled 23 per cent to #85.20, the lowest since October 1998, after it cut its full-year sales forecast from #9.6 billion to #9 billion.
Cap Gemini also announced 2,700 job cuts, or 4.5 per cent of its 60,000 workforce, in the US, Britain, Nordic countries and its telecommunications operations worldwide.
Poor news from chipmaker Applied Micro Circuits of the US helped pull the European IT sector down about 2.5 per cent and the computer services sector down almost 10 per cent. Nokia fell 2.6 per cent to #25.50, Alcatel fell 5.1 per cent to #22.77, SAP fell 4.8 per cent to #157.60, and Siemens fell 2.9 per cent to #70.50.
Siemens' offshoot Infineon, Europe's number two chipmaker, fell 9.5 per cent to a low of #26.61 after speculation re-emerged about a capital increase. Electronics group Philips fell 5.3 per cent to #28.74 after saying it would close its loss-making handset business and take a #300 million charge in the second or third quarter.
Global banks put their hopes for a US interest rate cut tomorrow to one side and concentrated on the outlook for securities earnings following the profits warning from Merrill Lynch.
France's BNP fell 0.7 per cent to #102.30 and Societe Generale 2.4 per cent to #69.80. Deutsche Bank gave up 3 per cent at #85.30. Swiss leaders UBS and CS Holdings fell 2.3 per cent to SFr250 and 2.8 per cent to SFr297.50 respectively.
Airline stocks also took a bashing, with KLM falling 4.1 per cent to #19.95 and Air France 5.4 per cent to #17.90. Lufthansa, which had to absorb a shift from "buy" to "hold" plus a reduced target price of #22 (down from #30) at UBS Warburg, lost 2.2 per cent at #18.
Ryanair fell 3.1 per cent to #12.06 to erase most of the gains built up on Monday following stronger than expected annual earnings.
