Telewest's digital plans hit by component shortages

Shares in Telewest Communications, the cable group, and Ericsson, the Swedish telecoms equipment maker, both plunged yesterday when the companies said product shipments would be delayed due to shortages of electronic components.

Shares in Telewest Communications, the cable group, and Ericsson, the Swedish telecoms equipment maker, both plunged yesterday when the companies said product shipments would be delayed due to shortages of electronic components.

Telewest slid 11 per cent after it reported that it would stop marketing digital set-top boxes, manufacturing by Pace Microsystems, owing to a shortage of flash memory chips. The chips are reprogrammable memory devices that retain their content after the power source is removed.

Ericsson stock tumbled 10 per cent after it reported that its mobile handset operation had lost 1.8bn Swedish crowns (£150m) in the first half. The company blamed the division's poor results on a fire at a factory run by Philips in the US, which had supplied it with ASIC chips.

Telewest stock ended down 23p at 235p in heavy selling. "Everybody is making far too much of this," said a spokesman, who added that digital cable installations would be on hold for one month. Telewest plans to revert to installing analogue set-top boxes. As more digital boxes become available, Telewest says it will uprade subscribers for free.

Pace Micro Systems said it had reported component shortages in preliminary results published earlier this month. Andrew Wallace, marketing director, said Pace was "extremely frustrated" at being unable to process orders. Sources at Telewest said the target of 500,000 digital subscribers by Christmas might now be missed.

In Stockholm, Ericsson stock crashed 19 crowns to 182 even though interim pre-tax profit rose fourfold to 18.6bn crowns. In the second quarter, Ericsson lost 1 per cent of market share in mobile phones to stand at 11 per cent.

It ranks third in the market behind Finland's Nokia and Motorola of the US.