TechMARK suffers worst-ever month as growth slows

The UK's beleaguerted techMARK 100 index fell a further 2.8 per cent yesterday bringing its loss of value to more than a quarter in the last month alone.

The UK's beleaguerted techMARK 100 index fell a further 2.8 per cent yesterday bringing its loss of value to more than a quarter in the last month alone.

Introduced a year ago to measure the performance of the New Economy, the index fell by 27.2 per cent in November, the third consecutive monthly decline. It lost only 15 per cent in each of the two months of March and April, when the tech bubble first began to deflate.

Analysts blame a growing fear that the market has underestimated the severity of an economic downturn expected next year. Steady selling of technology stocks has pushed the techMARK below its level a year ago, and to less than half its March peak.

The humbling of the New Economy's shooting stars will be symbolised next week with the demotion of at least three more of their number from the FTSE 100. The quarterly index reshuffle is finalised on the basis of market capitalisations on Tuesday night, but Bookham Technology, Baltimore and Sema are almost certain to be thrown out. All three lost at least another 6 per cent of their value yesterday.

Sema's share price has halved since issuing a profit warning last Friday, and Bookham, the fibre-optic technology firm floated in April, has collapsed 80 per cent from a high of £53 in the summer. It has been hit by fears that higher inventories among its telecoms industry customers point to a coming slowdown in Bookham's sales.

Baltimore, the encryption technology firm, has played hokey-cokey with the index all year, and proved unable to extend the rally that put it back among the blue chips at the last reshuffle in September.

Peter Misek, a senior research analyst at Chase H&Q, said the short-term outlook for tech stocks remains bleak, as the market lowers its expectations for economic growth. If that tempts companies to scale back expansion plans, then their future growth is even more uncertain.

"A technology stock's value is dependent on perceived future value, and that is very susceptible to small changes. And you have everybody reassessing growth rates right now."

Economic data from the US provided little cheer yesterday. Personal income fell by 0.2 per cent in October, when most economists had been expecting a rise. The weekly unemployment figure also climbed.

The techMARK 100 was off a further 70.36 points at 2,467.75, mirroring falls by Nasdaq, the US growth companies' stock market. That tumbled 5 per cent in early trading yesterday after Altera, the chip maker, and Gateway, which distributes PCs, warned they will miss their fourth-quarter forecasts.