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EDITIONS
Tuesday, 22 October, 2002, 16:10 GMT 17:10 UK
Shares slide as new gloom hits ABB
ABB worker
ABB has lost its once-stellar reputation
Shareholders in Swiss-Swedish engineering firm ABB have seen the value of their stock cut in half after the crisis-beset company warned its markets would be becalmed till late next year.

ABB's announcement, late on Monday, that it would miss its profit targets - it did not choose to set new ones - triggered massive selling, both on US markets overnight and in Zurich on Tuesday.

Yet more bad news came with an alert that a US unit could file for bankruptcy thanks to the burden of potential liabilities in a series of massive asbestos lawsuits.

ABB has suffered a series of trials in recent months, having narrowly escaped running out of cash in March and then lost its chief executive in early September.

Joergen Centerman's departure after just 18 months came supposedly because of disagreements with new chairman Juergen Dormann - himself a new arrival early in 2002, following the retirement of his long-serving predecessor Percy Barnevik.

In the process, the company's share price has slumped along with its reputation.

In afternoon trade, ABB shares in Switzerland were down 58% at a new all-time low.

Delayed

Speaking to reporters after what must have been an uncomfortable board meeting to review third quarter results to be published on Thursday, Mr Dormann said the company still intended to cut at least $1.5bn of its $4.1bn debt by the end of the year.

But he said that previous hopes about an imminent recovery had been dashed by weak sales through July, August and September.

The summer of 2003 was now the earliest likely date for the turnaround to materialise, as a cost reduction programme - involving as many as 12,000 job cuts - was moving more slowly than hoped.

"I can only apologise today," Mr Dormann said.

"We have misread the market development and we have not brought our processes up to speed as we had to."

'Leave me in place'

He begged shareholders not to turf him out immediately.

"I am pretty confident that we have convincing arguments that finally we will make it," he told reporters.

"It takes us a little bit longer, put please give me the credit that I am in this privileged position for a few weeks only.

"I have really to sort out what is wishful thinking and what is reality."

In the meantime, margin expectations are being cut and the Combustion Engineering unit in the US - bought in 1990 but now labouring under asbestos liabilities from decades earlier - could be allowed to go bust.

 WATCH/LISTEN
 ON THIS STORY
Dan Roberts, Financial Times
"People are very sceptical of ABB's idea that they can ring-fence their liabilities in this way"
See also:

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