Telecommunications and Internet firm Pacific Century CyberWorks (PCCW) shares plunged 11.2 percent Thursday after Britain's Cable and Wireless placed out a 4.9 percent stake worth US$1.34 billion.
PCCW fell 1.20 Hong Kong dollars to 9.55 (1.23 US) by the end of morning trade after the placement by Cable and Wireless at 9.88 dollars, an eight percent discount to Wednesday's closing price.
Dealers said the share disposal reflected Cable and Wireless' pessimism towards the prospects of PCCW, which is expected to post negative interim results by the end of this month.
Cable and Wireless was left with a 20.2 percent stake in PCCW and US$6.1 million in cash after selling its 54 percent stake in Cable and Wireless HKT in February.
James Loh, an analyst with Typhoon 8 Securities, said Cable and Wireless was not confident about the business of PCCW and said the British company would probably offload its remaining PCCW shares when it could.
"Cable and Wireless is in the position to know the business performance of CyberWorks. Probably, it expects that the interim results of CyberWorks will be unattractive, (so it is selling its) shares in CyberWorks now," he said.
An analyst with a Taiwanese-based brokerage said PCCW's business had yet to become firmly established, adding that the share price would remain under pressure in the near term.
He said his brokerage has a "buy on weakness" rating for CyberWorks.
Dealers agreed PCCW was likely to remain under selling pressure until Cable and Wireless was able to sell its remaining shares in the company.
"We expect the selling pressure on CyberWorks to continue as there is unlikely to be any breakthrough in the company's prospects in the short term," said Dennis Lau, senior manager of Manulife Fund Direct.
"Besides, Cable and Wireless will continue its placement exercise once CyberWorks' price reaches higher levels," Lau said.
However, Richard Li, PCCW chairman tried to put a positive spin on the sale, saying there was strong interest in the placement, which was two times subscribed.
"This sale has progressed quickly and smoothly. The oversubscription so early in the process is very unusual for a secondary placement of this size," Li said.
"The strong demand for our shares demonstrates confidence in and support for PCCW, our business plans and our overall strategy," he said in a statement.— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)
