Thursday, 26 March 2015 20:25
LONDON: European technology stocks, especially semiconductor names, fell sharply for the second day in a row on Thursday, part of a global sell-off as a host of brokers and investors questioned growth prospects and valuations.
The STOXX Europe 600 Technology Index was down 2.4 percent at 1315 GMT, tracking a similar decline in the United States concentrated among semiconductor companies overnight.
The jitters come a few weeks before quarterly earnings results begin for many of the biggest tech firms. The consensus 2015 earnings estimate for the index has fallen to 15.5 percent from 21.7 percent in January, Datastream data shows.
Nearly $ 3 billion was wiped off the market capitalization of ARM and ASML, which design computer and smartphone chips and make chip production equipment, respectively. The two companies’ shares have lost around 10 percent of their value in the last two sessions.
Traders said one reason for the pull-back was a note by U.S. investment bank Citigroup, which on Thursday cut its forecasts for the smartphone sector and target prices on stocks most highly exposed to China, the world’s largest phone market.
“We are now modelling total smartphone shipment growth of 15.5 percent in (2015), down from prior of 19 percent,” analysts at the bank wrote in a research note of the key Chinese market.
The bank also cut its target price for ARM, which designs the chips that control most smartphones and the shares were off 4 percent in London.
STMicroelectronics and Infineon, Europe’s top two chipmakers, and major mobile network equipment makers Alcatel and Nokia all suffered declines of around 3 percent, part of an across the board sell-off of the 25 components that make up the STOXX Europe 600 Technology index.
Copyright Reuters, 2015
