SHOCK PROFITS ALERT SENDS BT TUMBLING

Shock profits alert sends BT tumbling.

The telecoms giant’s underlying profits are expected to be at least £80million lower than City forecasts for the year to March as a result of operational failings in its global services division. The shares crashed 27p to 115p.

Analysts warned BT’s progressive dividend policy could be at risk, and expected the company to axe thousands of jobs as it attempted to cut costs in the arm that provides computer network services to corporate clients.


One of the first to go was Global Services chief Francois Barrault, 48, who resigned with a year’s payoff. He earned £1.57million last year.

BT said demand for global ser-vices remained strong, with revenues up 15 per cent, but that management had spent too much time on winning new business and not enough on controlling costs. As a result, the division’s underlying profits would be £120million, compared with City expectations of £200million for the second quarter to September.

BT chief executive Ian Livingston said the three other divisions were all performing in line with City forecasts. “The results in BT global services are particularly disappointing,” he said. “We acknowledge the performance in this part of the group is unsatisfactory and are committed to taking decisive action to rectify the situation.”

Analysts at Cazenove said the shrinking UK economy could hit BT’s performance and its pension fund. “These issues present significant risks to cashflows,” one said.