BT shares plunge on profit warning
November 3, 2008
Shares in BT have plunged by 25 per cent to their lowest-ever level after it shocked the City with a profits warning. Shares sank below the price they floated at in 1984 after the telco admitted in an unscheduled trading update that earnings at its Global Services arm will be much lower than expected. The shortfall means the group will fail to match last year’s profits. It blamed rapid expansion at the division, which provides IT and outsourcing services to firms around the world.
BT chief executive, Ian Livingstone, said the performance at Global Services was “particularly disappointing”, and the management is being changed. “We remain committed to providing world class networked IT services to our customers. We now need to focus on improving the operational efficiency of this business to drive shareholder value,” said Livingstone.
The financial hit means that BT will not achieve its target of growing earnings, on an EBITDA basis, this financial year.