U.S. tech sales warnings knock Alcatel, Infineon shares

[October 10, 2014] By Blaise Robinson

PARIS (Reuters) - Shares in telecom gear maker Alcatel-Lucent  fell 7 percent on Friday, extending a recent slump, after U.S. rival Juniper Networks Inc became the latest technology company to issue a warning on sales.

Juniper cut its third-quarter sales target late on Thursday, reflecting what it called lower-than-anticipated demand from service providers, particularly in the United States.

"Juniper has mentioned that U.S. telco operators have invested less than expected," a Paris-based trader said. "This is clearly a negative read-across for Alcatel's core segment and this should not reassure investors on the company's capacity to improve core business."

Alcatel stock has lost about 20 percent this week, hurt by mounting worries over the outlook for the sector, which has prompted hedge fund short sellers to increase their bets on further losses.

According to data from Markit, 11 percent of Alcatel shares are out on loan, up from 6.6 percent at the end of 2013, making it one of the most shorted stocks across Europe.

Alcatel's decline on Friday echoed similar losses across the tech sector, with Infineon shares down 5.5 percent and STMicroelectronics down 4.8 percent after a sales warning from U.S.-based Microchip.

Microchip said it believes an industry correction has begun and that more bad news is on its way from other chip makers.

The company cut its forecast for fiscal second-quarter sales, after experiencing subdued demand in September, especially in China, a month that is normally part of the peak production season for devices ahead of the year-end holidays.

The company is seen as an early indicator of demand in the global semiconductor industry because it is a highly diversified supplier of electronic components to some 80,000 customers and because it recognizes revenue when its distributors book sales to customers rather than simply when Microchip itself ships its products.

"Microchip noted that it was disappointed with the level of business activity and that sales in September did not materialize according to expectations," another Paris-based trader said. "It also noted that the revenue miss was led by China. This is negative for both Infineon and STM."

(Additional reporting by Alexandre Boksenbaum-Granier and Eric Auchard; Editing by James Regan)

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