Shares in Swedish telecoms equipment maker Ericsson plunged a further 10 per cent today after losing 21 per cent yesterday in the wake of a profit warning and consequent downgrades by investment analysts.
The world's biggest maker of mobile networks and third biggest supplier of cellular handsets alarmed investors yesterday when it warned it would make a $400-500 million pre-tax loss in the first quarter instead of breaking even as previously suggested.
It also said that sales would not rise 15 per cent year-on-year as earlier expected but would be flat or even fall.
The profit warning, the fourth disappointing announcement from Ericsson since mid-2000, came on the heels of gloomy reports from US technology groups Cisco, Intel, and Motorola, confirming a global slowdown in the sector.
What worried investors the most, analysts said, was that the economic slow-down was now also affecting Ericsson's so far highly profitable mobile networks production and not only handsets.
Ericsson's Finnish rival Nokia, the world's biggest and most successful handset maker, was up 1.2 per cent, recovering from yesterday's slide.
Goldman Sachs cut its price target for the stock, to 90 crowns from 115 crowns, and earnings per share forecasts by 55 per cent to 0.78 crowns and 25 per cent to 2.19 crowns in 2001 and 2002 respectively.
"Although we believe investors should be looking to pick long-term winners like Ericsson in mobile systems, without adequate information from the company and deteriorating systems environment, bargain hunters should be wary," it said.