The Week Ahead: O<SUB>2</SUB> to provide the oxygen as BT and Marconi take deep breath

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The Independent Online

The market will be bracing itself for gloomy news this week as tech companies and retailers update investors. With economic conditions tightening, very few will have good things to say.

The market will be bracing itself for gloomy news this week as tech companies and retailers update investors. With economic conditions tightening, very few will have good things to say.

Representing telecoms are BT, O 2 and Marconi, all of which release their results. Although the smallest of the three, much attention will be on the struggling Marconi, led by Mike Parton. Its future was thrown into doubt late last month after the group failed to win any of the £10bn BT supply contract. Since then it has said it will cut up to 800 UK jobs and pursue "all strategic options". This was seen as a "for sale" sign by many.

While results are expected to be in line with expectations, the focus will be on any comments from Marconi's management about the company's future.

Industry giant BT is expected to deliver flat earnings and here too there are concerns about its outlook. BT suffers from declining revenue in its fixed-line services and analysts will be looking for growth in mobile or internet-based products. BT is expected to try to assure the market that its newer services will offset its declining traditional business.

Mobile phone group O 2, once part of BT, is also reporting, and here the news should be better as pre-tax profits surge from £377m to £741m. That means the focus is likely to turn to the dividend, and the City is hoping it will announce an inaugural payout. Operationally, the focus will be on the German and UK markets as competition continues to heat up.

The retail sector, meanwhile, has been in the news due to slowing consumer spending. This week, investors will look out for how retailers see trading conditions for the coming months, which many analysts expect to be subdued at best.

Boots, which set the gloomy tone with a profit warning earlier this year, is set to announce full-year operating profits of £498m to £510m. The City will be more concerned, however, about how trading is holding up.

Chief executive Richard Baker is expected to confirm that it has placed its pharmacy business in the forefront of its recovery, but that there has been little movement in the sale of Boots Healthcare International, owner of Strepsils, Nurofen and Clearasil. Boots is hoping to get £1.1bn for it.

The other big retailer to report will be supermarket group J Sainsbury. Under Justin King, the chain is being overhauled as it tries to re-establish itself in the market. Pre-tax profits are likely to fall from £567m to £276m.

Its problems have been well documented over the past year - but this week there may actually be some good news for a change. Recent market research showed the fallen giant's market share was edging ahead.

Another victim of intense competition in the grocery sector, milk supplier Robert Wiseman Dairies, is also reporting. It recently lost a contract to supply Wm Morrison, a big blow, and analysts will want to know what happens next.

Elsewhere in a busy week, the London Stock Exchange, which recently attracted takeover attention but thus far remains resolutely single, will release its results, and Cadbury Schweppes will provide a trading update at its annual general meeting.

Analysts expect Cadbury Schweppes, which last week snapped up organic chocolate group Green & Black's, to confirm that its US beverages division is outperforming its main competitors.

As summer - finally - starts to get under way, the City will be looking for optimistic noises from the pubs sector for this key season. Reporting this week are Mitchells & Butlers, Wolverhampton & Dudley Breweries and Enterprise Inns.

Wolverhampton & Dudley has completed three acquisitions in the past 18 months, which has added 661 pubs to its stable and is part of a flurry of consolidation sweeping the sector. As for Mitchells & Butlers, some analysts are concerned that it may report that consumer demand is weak and hitting home.

A number of economic announcements are also due. Most interest will be attracted by inflation data, which is expected to show a small rise. Further retail sales data will be released, while some economists are concerned that the claimant unemployment data for April could rise.

There are also worries that the economy is not creating enough private sector jobs to keep unemployment down.

Away from the City, likely to be of interest are results from the state-owned Royal Mail, whose profits should be more than £500m. Postal workers are set to share a £200m windfall from the record profits.

CALENDAR

Tomorrow 16

UK: Results: (final) Bizspace, Freeplay Energy, Robert Wiseman Dairies; (interim) Cambridge Antibody Technology Group, RM..

Tuesday 17

UK: Results: (F) BAA, Blooms of Bressingham Holdings, Braemar Seascope Group, Business Post Group, Land Securities Group, Viridian Group, VT Group, Yell Group; (I) Connaught, Enodis, Enterprise Inns, ScS Upholstery, Slimma.

Wednesday 18

UK: Results: (F) Aveva Group, J Sainsbury, mmO2, Phoenix IT Group; (I) Compass Group, Fulcrum Pharma, Holidaybreak, Ultraframe.

Thursday 19

UK: Results: (F) Boots, BPB, BT Group, Invensys, Investec, London Stock Exchange, Mothercare, National Grid Transco, Petards Group, SABMiller, Synergy Healthcare; (I) Avon Rubber, Jelf Group, Mitchells & Butlers; (first quarter) Tomkins.

Friday 20

UK: Results: (I) Wolverhampton & Dudley Breweries.

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