JSE technology shares saw their mild recovery stalled this morning after taking a beating yesterday. This followed a slump in international sentiment towards ICT stocks.
Downbeat announcements by international companies such as cellphone-maker Nokia, Dow Jones heavyweight IBM, and software giant SAP contributed to the fall on the local bourse.
IT technology distributor Datatec compounded its woes after announcing the sale of its 50.5% shareholding in Affinity Logic to UCS for R19.5 million after purchasing it in September 1998 for more than R175 million.
All the news contributed to the JSE`s IT index plunging by 3.89% to 4 730 points and it looked set for further losses.
"Sentiment towards IT shares has turned sour on an international note and this has caused investors to try and lock in some gains after the rise in the IT share prices seen in previous months," says Julian Henry, a dealer at stockbroker Barnard Jacobs Mellet.
The wobble started on Wednesday after IBM announced that its second quarter net profit rose by 11%, meeting expectations on sales that were slightly above estimates. There was concern that the real gains were made in currency translations as the dollar had weakened against most major international currencies. Big Blue`s share price fell by more than 4% on Thursday.
Dollar worries also affected the world`s largest cellphone manufacturer Nokia, which says its third quarter earnings would be harmed by the US unit`s weakness and losses in its networking division. Its share price plunged by 20% on Thursday.
German software-maker SAP reported that business conditions were tight as sales lagged in a weak economic environment, although its earnings came in slightly higher than expected. Its American shares shed 8%.
"All those companies have given very guarded forecasts and that has hit our big name shares," says Henry.
Dimension Data was last seen at 300c, down another 2c, after plunging more than 7% on Thursday. However, Datatec continued to feel the pain by ditching a further 10c to 732c after losing 2.6% on Thursday. UCS, which bought Affinity Logic, was little changed at 65c.
Recently listed SA telecommunications giant Telkom was down 10c at R41.10 after losing 91c on Thursday, while cellphone network operator MTN was up 1c at R16.51, after having dropped 509c in the previous session.
"We may see a small recovery, but it looks as though sentiment has changed for the worse towards the tech shares," says Henry.
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