In the last week, stocks across the world have plunged with technology shares bearing the brunt of the losses. All of the major stock market listings, including Nasdaq, Dow Jones and the London Stock Exchange, saw the slide gain momentum over the course of the week, fuelled by profit warnings and job cuts from major IT companies.
A series of milestones were crossed, with the London Stock Exchange dropping to its lowest level since 1997 and the Nasdaq falling through its 2,000 level. The bleakest predictions coming from analysts warn that the FTSE index — which includes Britain’s largest companies — could drop below the 5,000 level, wiping £200bn off share values.
Marianne Kolding, European services analyst at IDC, claimed the problems could continue for some time, until more investors found the confidence to buy back into the market.
“There are a few brave souls buying up again, but I’m not sure we will ever get back to the heady highs of two years ago,” she said, adding market correction might see some more realistic values being put on firms.
“There is no reason to panic and dump the whole thing, but no matter how good the results, the company and its prospects are, even ones which are profitable are losing values and it must be deeply frustrating for those companies,” she added.
UK-listed tech firms saw shares drop with the likes of Computacenter, Compel, Morse and Action Computer Supplies all suffering.
In the last quarter, Compel’s share price has dropped to less than £1.00 from more than £3.75, Morse shares went down to £3.80 from almost £5.60, Computacenter from £11.00 to less than £4.00 and Action Computer Supplies to lower than 30p after being £1.20 at the start of the quarter.
Henry Lewis, chairman of Action Computer Supplies, claimed it had not self-generated its share price drop, but had been caught up in the stock market problems and seen its value dip as a result of external influences.
“Our stock price is 20 per cent off this year’s peak and if you look at Compel and Computacenter, it’s a similar situation for them,” he claimed.
Mark Byatt, group marketing director at Morse, said it would continue to operate as normal and concentrate on its business rather than focusing on its share price.
The impact of the tech stock slide is also being felt in the US. Marc Paterson, vice president of managed access services at New York Stock Exchange listed telecom specialist Infonet, claimed it was frustrating watching the markets dive and affect everyone.
“We have seen a slide across the board. If you have an association with a sector you get caught, no matter who has the bad news.”