MARKET COMMENT
Top Ten Profit Warnings

By Maynard Paton (TMFMayn)
December 20, 2002

Crash! Bang! Wallop! They're the noises most shares have made over the past twelve months. If nothing else, 2002 has been the year of the profit warning, with a stream of gloomy updates leaving investors helpless as their shares were savaged.

To commemorate the all-round portfolio carnage, here's a rundown of the year's top ten one-day share price horrors within the FTSE 350. Investors of a nervous disposition should look away now.

10. Game Group -- December 17th, down 57.2%

It's going to be a tough Christmas for Game Group (LSE: GMG) shareholders. Earlier this week, the computer game retailer warned of "disappointing" December trading and an "unexpectedly high level of promotional activity" from its rivals. All a far cry from January, when comments of an industry "golden era" were made.

9. Big Food Group -- July 25th, down 58.9%

"A too aggressive move towards a value driven proposition" caused trouble at Big Food Group (LSE: BFP) during the summer. Sales at its Iceland retail chain declined and forced the group to report a first-half loss. Investors were upset because two weeks prior to the warning, Big Food issued a somewhat reassuring update.

8. Amey -- October 16th, down 60.2%

After just two months in the job, the departure of finance director Michael Kasyer sent shareholders fleeing from struggling outsourcer Amey (LSE: AMY). Just why he left became clear soon after; his replacement had to cancel a previously approved dividend because of "insufficient distributable reserves".

7. MyTravel -- October 17th, down 62.3%

MyTravel's (LSE: MT.) third profit alert of 2002 wrapped up a dismal year for the holiday firm. Just three weeks after its second warning, MyTravel admitted that "a number of additional matters have now come to light". The bad news involved a profit shortfall of at least £35m and an ongoing "detailed review of... financial processes".

6. ARM -- October 2nd, down 62.9%

ARM Holdings (LSE: ARM)(Nasdaq: ARMHY), for so long immune to the tech downturn, finally bowed to the inevitable in October. Shareholders of the microchip designer had been expecting sales growth of about 25% in the third quarter, but "continued challenging market conditions" left them with a 12% revenue shortfall.

5. British Energy -- September 9th, down 65.3%

After problems at a few nuclear reactors, September saw British Energy (LSE: BGY) seeking "immediate financial support" from the Government to "enable a longer term restructuring to take place". Unfortunately, "appropriate insolvency proceedings" were the only other alternative.

4. Spirent -- October 9th, down 66.9%

"Further broad ranging cuts and deferrals in capital expenditure by our major customers" left network technology experts Spirent (LSE: SPT) no option but to confess to a significant shortfall in second-half profits. Various write-offs and the possibility of a passed final dividend did not find favour.

3. Pace Micro Technology -- March 5th, down 67.1%

Pace Micro Technology (LSE: PIC), the digital set-top box specialist, owned up to "difficult" trading conditions over the first two months of 2002. Pace said sales for its full year would be around £350m, a figure that represented a "significant shortfall" on previous estimates. A substantial reduction in capital expenditure by UK cable companies was mostly to blame.

2. Energis -- February 21st, down 69.8%

After initiating a strategic review in January (when the shares plunged 57% in response), the following month saw Energis (LSE: EGS) admit it would be "unable to comply with certain of its existing financial covenants". Not even major shareholder National Grid (LSE: NGG) wanted to rescue the cash-strapped telecom firm, and Energis eventually went under in May.

1. WS Atkins -- October 1st, down 72.5%

This year's AGM at WS Atkins (LSE: ATK) was probably a stormy affair. Shareholders were told "the introduction of the technology refresh and new control systems has been more difficult and costly than expected, which has had an adverse impact on billing and credit control". Rapidly increasing debts, ongoing problems with PFI contracts and the departure of the chief executive caused the share price terror.