Profit warnings add to woes for small-cap sector

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The Independent Online

The UK small-cap sector suffered a bout of profit warnings yesterday as struggling hi-tech companies renewed fears over job losses and falling demand in the telecoms sector.

PNCtele.com, the former Personal Number Company, saw its shares plunge 34 per cent to a record low of 27.5p, valuing it at just £13.4m, after it said its results for the year to next March would be "substantially below" market forecasts due to mobile phone networks removing subsidies on handsets for pay-as-you-go phones. Analysts slashed earnings forecasts by 50 per cent.

PNC also announced the departure of its finance director, Paul Hinder, and said it was in the advanced stages of finding a successor.

The groupblamed the problems on previous management. PNC said the poor performance came down to "a revised view of the market in which the company's businesses operate, and unrealistic internal forecasts based on the company's previous strategy". Cost-cutting measures aimed at saving £1.25m a year had already been put in place, and the company was pressing ahead with a marketing drive that it expected would gain and retain "high-value" customers.

The company was founded by the Carphone Warehouse entrepreneur, Charles Dunstone, and achieved a market valuation of £200m at the height of the technology boom last year.

A profit warning from Intelek, the electronic components manufacturer, saw its shares fall 31 per cent to 53.5p, valuing the business at just £8.9m. The company, which was valued at almost £70m last year, said it was cutting 40 staff following a sharp downturn in orders. Full-year results were likely to come in "well below" market expectations, it said, citing a lack of confidence in telecoms investment caused by difficulties in the mobile phone market.

Advanced Power blamed cancelled orders for a profit warning that shaved 9.75p off its shares, which closed at 20.25p, valuing the group at £15.8m, less than half its peak value.

The warning came on the back of an earlier gloomy statement made at the beginning of last month, when Advanced Power said it was suffering from collapsing demand in North America.

The company said it had resolved disputes with customers without recourse to legal action which would see it paid in the first quarter of 2002, although it would receive less than the value of the original contracts.

However, the cancellations had left Advanced Power with surplus stock unlikely to be sold in the coming year. That meant it had to take provisions of £400,000 against stock. The combined effect of the settlements and write-downs would see the company make a loss of no more than £1.1m this year.

Mark Robinson, the chief executive of Advanced Power, said there was strong interest in the company's design activity and its more recent telecommunications product launches.

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