Hi-tech profit warnings send shares plunging

The dangers of investing in technology stocks were underlined yesterday when two companies in the sector issued profit warnings that sent their share prices into free-fall and left many stockbrokers struggling to hide their embarrassment.

The telecommunications equipment maker Telspec crashed 242p to 513p after Frank Hackett-Jones, the chairman, told shareholders that profits in the first half of 1996 would be hit by delayed sales. Shares in the AIM-listed microchip repairer Memory suffered a similar fate, closing down 37p at 133p yesterday to test an all-time low of 130p, on news that sales of computer memory chips aimed at Apple and the bottom end of personal computer markets had been disappointing.

The profit warnings are likely to infuriate investors in both companies.

Mr Hackett-Jones raised almost pounds 15m when he sold two million shares at 772p last September, while Memory has had a torrid time since the heavily promoted shares were placed by Manchester broker Henry Cooke Lumsden at 420p last autumn - just before US giant Intel launched a price war in the computer chip market.

Prices have since fallen by over 60 per cent to a level some observers feel is permanent.

Telspec warned in February that contracts for products worth pounds 6m had been delayed. Last month it unveiled 1995 pre-tax profits of pounds 8.7m - pounds 1.5m below market expectations. It now says some high-margin sales have been deferred to the second half.

Slower-than-expected trading in the Middle East and Asia/Pacific and problems with raw material purchasing were also blamed.

The run of bad news has tarnished Telspec's reputation as one of the brightest new issues of 1994. The shares were placed with institutional investors at 160p and rose steadily to peak at pounds 10 in November.

Loss-making Memory's warning of possible stock write-downs was its second in a little over a month and followed a string of disappointments, including production delays and missed profit targets which have raised doubts in the industry over whether it will ever make any money.

The Scottish-based company buys defective chips, repairs them and creates refurbished boards for computer manufacturers.

It initially estimated the value of its market at pounds 20bn by the year 2000, but last year posted a nearly-doubled pounds 1.95m loss.

The collapse has left many in the City with egg on their faces. Back in January the broker UBS tipped the shares to go to pounds 10 by 1998, forecasting profits of pounds 16m this year. That, and Henry Cooke Lumsden's pounds 20m estimate, have now been torn up.

A month later, Cameron McColl, Memory's president and chief executive officer, gave an upbeat presentation to UBS clients following a distribution deal with Sumitomo of Japan.

News
Pro-Russia rebels guard a train containing the bodies of victims of the Malaysia Airlines flight MH 17 crash in Torez, Ukraine
i100
Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
Arts and Entertainment
<p><strong>2008</strong></p>
<p>Troubled actor Robert Downey Jr cements his comeback from drug problems by bagging the lead role in Iron Man. Two further films follow</p>
filmRobert Downey Jr named Hollywood's highest paid actor for second year running
PROMOTED VIDEO
Property
Sign here, please: Magna Carta Island
propertyYours for a cool £4m
Life and Style
tech
News
people
News
The Commonwealth flag flies outside Westminster Abbey in central London
news
Arts and Entertainment
Struggling actors who scrape a living working in repertory theatres should get paid a 'living wage', Sir Ian McKellen has claimed
theatre
News
Skye McCole Bartusiak's mother said she didn't use drink or drugs
peopleActress was known for role in Mel Gibson film The Patriot
Arts and Entertainment
tvWebsite will allow you to watch all 522 shows on-demand
Arts and Entertainment
filmThe Rock to play DC character in superhero film
News
i100
Arts and Entertainment
Damon Albarn is starting work on a new West End musical
artsStar's 'leftfield experimental opera' is turning mainstream
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
Paul and his father
artsPaul Carter wants to play his own father in the film of his memoirs
Sport
Ben Stokes trudges off after his latest batting failure for England as Ishant Sharma celebrates one of his seven wickets
cricket
Arts and Entertainment
Members of the public are invited to submit their 'sexcapades' to Russell T Davies' new series Tofu
tv
News
Sky's Colin Brazier rummages through an MH17 victim's belongings live on air
i100
Arts and Entertainment
Keira Knightley and Benedict Cumberbatch star in the Alan Turing biopic The Imitation Game
arts + ents'The Imitation Game' stars Benedict Cumberbatch and Keira Knightley
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Training Programme Manager (Learning and Development)-London

£28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

Training/Learning and Development Coordinator -London

£28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...

Business Anaylst

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...

Project Manager - ETRM/CTRM

£70000 - £90000 per annum + Job Satisfaction: Harrington Starr: Project Manage...

Day In a Page

Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

Meet the people who play with Lego for a living

They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

20 best days out for the summer holidays

From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
Open-air theatres: If all the world is a stage, then everyone gets in on the act

All the wood’s a stage

Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
Rand Paul is a Republican with an eye on the world

Rupert Cornwell: A Republican with an eye on the world

Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
Self-preservation society: Pickles are moving from the side of your plate to become the star dish

Self-preservation society

Pickles are moving from the side of your plate to become the star dish
Generation gap opens a career sinkhole

Britons live ever longer, but still society persists in glorifying youth

We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor