Ericsson puts telecoms in spin

TELECOMS stocks in Asia had their lines crossed today in the wake of a profits warning from global giant Ericsson. Network providers and hardware manufacturers around the region were pulled down after the Swedish giant on Monday became the latest operator to shock investors with a sharp downgrading of its own prospects.

WorldCom warned on Friday that earnings would miss analysts' estimates, adding to the gloom already created by similar forecasts from global leader Nokia. The bad news sent shares of Japan's NTT DoCoMo mobile giant sliding almost 1.5%, while its parent NTT lost more than 1%. The Nikkei 225 Average was saved from serious damage by continued strength in computer related stocks, and managed a gain of 15.19 points at 11,763.83.

Encouraging book-to-bill ratios on US semiconductor orders, which indicated growing demand for chips, kept buyers busy and NEC shook off early nervousness about its handset operations, as hopes grew for its electronics.

The long-awaited deal between South Korea's Hynix Semiconductor and US chips giant Micron boosted shares of other memory-makers in the region, but the Korean company's stock slipped slightly. Threats by Hynix workers to strike against the deal, and questions about the valuation put on the company's assets, left the shares down almost 1%, and the Kospi index fell back for the third day in a row, losing 1.9 points at 918.99.

The $3.4bn (£2.3bn) deal was seen as good news for other makers of memory chips as Hynix will exit the business when the deal is completed, raising hopes that less competition would boost prices. Samsung Electronics, already on a roll after posting record first-quarter profits on Friday, benefited with a further 3% gain.

Taiwan's smaller chipmaking companies were also boosted by the deal and by stronger D-Ram prices, but the giant Taiwan Semiconductor was hit by falling prospects for its telecommunications products, and dragged the Weighted index down 59.12 points to 6403.17.

Hong Kong stocks shrugged off concern about the effect of Argentina's turmoil on HSBC Holdings, as investors looked to the longer-term impact that growing US demand will have on its overall economy. HSBC shares gained 75 cents to HK$90.75 as analysts pointed out that the bank had made sufficient provisions for its Argentine business. The Hang Seng index jumped 146.34 points to 11,285.76, led by garment trader Li & Fung and micro-motor manufacturer Johnson Electric, which have become the local proxies for the US recovery.

The Ericsson effect hit Australia's Telstra group, stumbling on sluggish earnings prospects. The All Ordinaries index dipped 10.6 points to 3351.5. News Corp shares added more gloom, as the stock shed 2%.

Singapore Telecoms joined the regional slide, and lost 1.2%, but some bargain hunting left the Straits Times index up 0.86 at 1728.52. Malaysian stocks resumed their recent upward march, and the Kuala Lumpur Composite added 2.24 points to 809.54. Thailand's SET index fell 5.26 points to 381.66, but in Indonesia the Jakarta Composite index put on 5.96 points to 540.65.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed in the tables.