Market Report: Arm shares hit by Google's choice

Laura Chesters
Thursday 08 August 2013 01:48

The latest battle in the microchip wars began yesterday when Google waded in and punters decided Arm Holdings could be on the losing side this time. The lucrative microchip market for smartphone and tablet devices has been opening up to new competition and yesterday search giant Google and chip maker Nvidia were among a handful of tech specialists that signed up to join computer group IBM's OpenPower consortium.

Tech experts described the IBM consortium as a version of what Arm has been doing with its own chip processors. IBM will open up the intellectual property of its hardware and software to allow for licensees to develop new chips in a bid to compete with established and successful chip designers such as Intel and Arm.

It isn't the first time Arm has faced the threat of competition, but yesterday investors appeared concerned and it was one of the worst performers on the benchmark index, down 26p to 860.5p. The stock reached an all-time high of 1,097p in May, but since then concerns about growing competition from other tech giants has caused it to slip more than 20 per cent.

The FTSE 100 collapsed 93 points to 6,511.21 after Bank of England Governor Mark Carney detailed his plan to link monetary policy to the unemployment rate.

Michael Hewson, analyst at spreadbetter CMC Markets, said: "Whether it be tapering concerns, a less-dovish than expected Bank of England, or simply just plain investor disinterest, we've seen equity markets continue to lose ground."

With a fourth-successive decline it is the worst losing sequence since June.

The wooden spoon went to tour operator Tui Travel. It reported an 18 per cent jump in profits for the third quarter and said it is confident it will deliver full-year profit growth of at least 10 per cent, but some traders were concerned about signs of slowing sales since May. Others suggested its 20.7p drop in share price to 380.8p was due to profit taking after a strong run recently.

Consumer goods behemoth Unilever fell 106p to 2,572p as it went ex-dividend yesterday. The soap to PG Tips maker had also been hit by a rating reduction by analyst at JP Morgan on Tuesday. JP Morgan rated it neutral, down from overweight, and said it is worried about "muted margin rise" and "slower top line growth".

The shine came off yellow-metal digger Randgold Resources amid City fears it could be forced to borrow money to finish its Congo gold mine.

A slump in gold prices meant African-focused Randgold warned it may need to tap its bank to borrow money to complete its Kibali mine in the Democratic Republic of Congo. The news came as it reported second-quarter results which included a profit drop of 61 per cent from the same period a year ago and a sales dip of 27 per cent.

Like other precious-metal miners, the group has been hit by falling prices – gold fell 23 per cent in the second quarter. The shares tumbled 62p to 4,366p.

Debt-free Randgold, run by Mark Bristow, agreed a $200m (£130m) credit facility earlier this year and analysts at Investec said that although the "depressed gold price has not come at a good time" for the group its "operations are still cash generative, as opposed to many of its peer group", and the fact it has the revolving credit facility lined up is a good thing.

Top of the index was insurer and fund manager Old Mutual as it reported brisk business in emerging markets and rose 5.6p to 198.1p.

The stand out riser of the day – up more than 13 per cent – was Ukrainian iron ore miner Ferrexpo. It topped the mid-tier index when it reported first-half profits of $244m. The group, majority owned by Ukraine's youngest billionaire, Kostyantin Zhevago, 39, said its $647m programme to increase production and improve the grade of iron pellets at its Yeristovo mine in the Poltava region was on track and it produced a 21.6p gain to 185p. The rally is in stark contrast to earlier this year when it faced fears over a China slowdown and falling commodity prices. Shares in Ferrexpo are down more than 37 per cent since the start of this year.

Aim-listed drugs-testing company Cyprotex announced a record half-year profit and will raise £7m to upgrade its US facilities. It was 0.875p better off at 6.75p.

Summit got US patent protection for its drug to treat muscle-wasting disease Duchenne muscular dystrophy and its shares were 0.5p better at 6p.

Small-cap plane specialist Air Partner hired financial-services expert Paul Richardson as director of its private jets division and it flew up 46.5p to 415p.

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