Canada's TSE 300 Could Plunge Tomorrow as Nortel Slumpsgreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
10/24 18:49 Canada's TSE 300 Could Plunge Tomorrow; Nortel Slumps (Update2) By Liz Chong
Toronto, Oct. 24 (Bloomberg) -- Canada's Toronto Stock Exchange 300 Composite Index, the best performing major index in the world this year, could plunge tomorrow after Nortel Networks Corp. reported lower-than-expected third-quarter sales.
Shares of Nortel, which makes up 30 percent of the TSE 300, fell 23 percent to $48.63 in New York after the results were released. The Toronto Stock Exchange had closed.
A similar drop when trading opens tomorrow in Toronto could shave about 700 points, or almost 7 percent, from the TSE 300. The index has had two single-day drops of more than 7 percent since its creation in 1977, with the worst decline an 11.1 percent plunge on Oct. 19, 1987.
``We sold all our shares of Nortel two weeks ago,'' said Brian Acker, president of Toronto-based money manager Acker Finley Inc. ``I'm going to have a beer tonight.''
Nortel's sales rose 42 percent to $7.31 billion, compared with an estimate of $7.59 billion in a First Call/Thomson Financial Inc. poll of seven analysts. The company said revenue fell short of forecasts as installations of fiber-optic equipment were limited by personnel shortages.
Nortel, based in Brampton, Ontario, fueled much of the TSE 300's 23 percent climb this year. Shares of Nortel, the largest maker of fiber-optic equipment, have risen 32 percent this year in Toronto as of today's close. Nortel is one of Canada's most widely held companies, both by individuals and money managers.
A decline in the TSE 300 could be compounded by a drop in shares of JDS Uniphase Corp., which makes fiber-optic components for Nortel and reports fiscal first-quarter earnings Thursday.
JDS, the 29th largest company in the index, fell 11 percent in after-hours trading.
-- Carl Jenkins (Somewherepress@aol.com), October 24, 2000
October 24, 2000 Nortel Networks stock sinks in U.S. after-hours trading after profit report
TORONTO (CP) -- Shares in high-tech leader Nortel Networks took a beating in after-hours trading Tuesday as investors worried that the Canadian company can't sustain its amazing growth. The stock drop doesn't augur well for the Toronto Stock Exchange, where a $1 shift in Nortel's share price moves the TSE 300 index more than 30 points -- up or down.
In U.S. after-hours trading, Nortel shares fell as much as $15 to about $48 US after the markets were closed and Nortel released its third-quarter results. In earlier trading on the New York Stock Exchange, the stock had dropped $3.63 to $63.31 US. In Toronto, Nortel shares fell $5.90 to close at $96.05 Cdn in trading of nearly 9.4 million shares. Some analysts said Nortel's plunge was an overreaction. And Nortel chief executive John Roth blamed it on light after-hours trading and day traders selling off. "No one's going to be buying until they hear all the news," he said in an interview. Nortel reported operating profits of $574 million US, or 18 cents a share, on revenue of $7.31 billion. Analysts had expected 17 cents a share. Katherine Beattie, senior technical analyst at Standard and Poor's MMS, called Nortel "a very strong stock. We've seen it bounce back repeatedly and, because it is THE stock on the Toronto stock market any international investor who wants a piece of the TSE is going to buy Nortel." But Beattie conceded Nortel may suffer at the hands of fickle investors. "The way the market has been behaving, even when companies come in as expected you can see a bit of a selloff.'
-- Martin Thompson (firstname.lastname@example.org), October 24, 2000.
Whew! Shortly after opening, the TSE was down 890 points!!
-- Rachel Gibson (email@example.com), October 25, 2000.