Shares of UK-based Cable & Wireless fell by more than 15 percent after the firm forecasted a 6 percent drop in first-half revenue at its core UK business. The company claimed sales were shifting away from its retail division to carrier services. C&W said it saw weaker than expected margins for its retail service. The company also attributed the growing demand for VoIP services to the weak forecast. C&W's UK retail-service revenue fell by 13 percent to £375 million, while carrier-service sales grew 3 percent to £390 million.
In an attempt to tap into this changing market, Cable & Wireless acquired Energis for $1.07 billion. The fixed line operator provided phone and Web services to the enterprise. C&W also noted the inability of its broadband unit, Bulldog, to contribute to sales pending an investigation by regulators to determine if the service billed customers while failing to provide services.
For more on C&W's weak financial forecast:
- take a look at this piece from MarketWatch