Spirent axes 500 jobs as trading alert sees shares dive 18%

Click to follow
The Independent Online

Spirent, which makes kit to test telecoms networks, yesterday axed 500 jobs as it warned it expected trading in the second half of its year to deteriorate. The alert wiped around £230m off the company's market value as its shares plunged 17.7 per cent to 115.5p.

The warning also hit Marconi, sending shares in the troubled telecoms equipment maker down 9.7 per cent to 53.75p.

Nicholas Brookes, Spirent's chief executive, said the company's performance in the second half of the year would be "depressed by difficult conditions" in its major markets in the US and in Europe. "Telecom Test [division] has continued to decrease. Our July and August order rates were 10 per cent down from the second quarter, so we decided to take a conservative view for the remainder of the year," he said. That division's customers include the likes of Cisco, Lucent, Alcatel and Nortel.

Meanwhile, a massive £266m charge covering exceptional items, including a £248m goodwill impairment charge to reflect the lower value of recent acquisitions, sent Spirent crashing into the red.

Spirent recorded a pre-tax loss of £242.8m in the six months to 30 June compared with a profit of £32.7m a year ago. Sales grew 45 per cent to £458.9m. Spirent's exceptional charges also included a £14.9m writedown to cover excess inventory and bad debts. The job losses, representing around 6.5 per cent of Spirent's total workforce, will fall mainly in the US with "very few" reductions in the UK. Half of the 500 job cuts have already taken place and the exercise, which will cost Spirent £9m, is expected to yield around £30m of savings a year. Spirent's results were delivered a week earlier than expected.