[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Friday, 7 October 2005, 13:59 GMT 14:59 UK
C&W shares slump on sales warning
Cable & Wireless office
Cable & Wireless said it was still optimistic about its profit outlook
Cable & Wireless shares have slid 16% after the firm issued a profit warning.

The telecoms company said sales in the six months to September at its core UK business would fall 6% to 765m ($1.4bn) from 810m a year ago.

Cable & Wireless blamed "difficult" market conditions in the UK, where there is tough pricing competition.

Companies are having to offer better deals, as many clients are looking to shift from traditional fixed-line phone services to internet-based services.

Cable & Wireless shares dropped 22.50 pence to 119.25p in London, knocking almost 550m off the company's market value. Trading volumes were four times the usual daily levels.

'Level of deterioration'

The company's shares have rallied more than 20% over the past six months because the market was becoming more optimistic about the outlook for the firm's UK operations, analysts said.

Friday's announcement has dented those expectations and raised concerns that longer-term profit forecasts may be compromised.

We expect a satisfactory outcome for the full year
Cable & Wireless

"Whilst we are not surprised by the fact that UK trading is weak, the sheer level of deterioration surprises us," said Christian Maher, an analyst at Investec.

Cable & Wireless looked to play down concerns, saying that it still expected full-year earnings to be positive.

Cable & Wireless's overseas earnings - particularly in the Caribbean region - are helping to offset the problems in the UK market, the firm said.

"National telcos (telecom companies) continue to perform well and looking at the group as a whole, although UK trading conditions remain difficult, we expect a satisfactory outcome for the full year," the company said in a statement.

In August, Cable & Wireless agreed to buy business telecoms provider Energis for an initial 594m in cash.

The company said that earnings growth had slowed since it announced the deal and warned that approval for the purchase from the Office of Fair Trading might take longer than first expected.

The takeover will make C&W the UK's biggest telecoms network provider after British Telecom.



SEE ALSO:
C&W to buy Energis and cut jobs
16 Aug 05 |  Business
Thus sets out Energis bid plans
15 Aug 05 |  Business
Cable & Wireless 'eyeing' Energis
22 Jul 05 |  Business
France Telecom 'planning C&W bid'
19 Jun 05 |  Business
Cable & Wireless to cut 600 jobs
10 Nov 04 |  Business
Profits rise at Cable & Wireless
02 Jun 04 |  Business


RELATED INTERNET LINKS:
The BBC is not responsible for the content of external internet sites


PRODUCTS AND SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific