Hi-techs face Footsie fallout

AFTER the humiliating plunge of Vodafone shares below 100p over the past month, fans of hi-tech shares might believe it can get no worse. But they will have to brace themselves for more pain on 12 June, when the FTSE 100 index comes up for its quarterly review.

The skids are under at least three of the hi-tech groups that soared into the Footsie in the mad bubble days at the end of the 1990s, when it seemed that shares in any company with a hi-tech flavour was the passport to an instant fortune, regardless of whether or not it made profits.

Since then the magic has faded and most loss-making hi-tech companies have been demoted from the prestigious index. But the axe is now hovering over profitable hi-tech companies with good growth records.

Logica, with a stock market value nearer £1bn than the £2.3bn Footsie plimsoll line, looks a cert for demotion. Shares in the company led by managing director and chief executive Dr Martin Read have crashed after a profits warning last month, and the same fate has overtaken another past favourite, Electrocomponents. Its value has fallen below £2bn, and it also looks set for the chop. Electronic chip designer Arm Holdings could also be at risk after a sharp broker's downgrade in the past week, along with International Power and EMI, since all their rankings have been edging over 100 in recent weeks.

Challenging them for coveted places in the high-stepping Footsie index are old-economy stalwarts such as platinum refiner Johnson Matthey, packaging group Bunzl, Bradford & Bingley bank and magazines and radio group Emap.

Also up for consideration by the Footsie Committee is Swiss mining and resources group Xstrata, which floated in March and has dual listing. All have been nudging under 100th ranking. But a lot still hinges on market movements in the meantime.

Companies that fall and stay below 110th ranking at the close on 11 June are automatically demoted, while contenders have to rank among the top 90 to be automatically included.

Takeovers can also affect membership of the FTSE 100. GKN was promoted in late May in place of Innogy when its takeover was completed. Companies that survive the June review should edge up in the rankings over the next month when agreed takeovers are due to take Powergen and Lattice out of the index.