Telekom Hits Another Record Low
June 15, 2002
It was the darling of Germany's stock market.
When the fomerly state-run Deutsche Telekom went public in 1996, virtually all of Germany was encouraged to invest. The stock price began at 14 euro but soon soared to more than 100 euro as Telekom euphoria, coupled with a booming economy took hold.
Now, the round 3 million small share-holders that bouyed the Telekom stock through the high times are being forced to deal with crushing lows. Telekom stock dropped to below 10 euro in Friday trading, the lowest mark in its history.
Black Friday for indexes
The drop was part of a worldwide plunge in stock pricing indexes precipitated by a report citing a drop in the US consumer confidence inex a bomb attack outside the US Consulate in Pakistan.
The Deutsche Aktienindex, or DAX, dropped to lows unseen since terrorist attacks in New York and Washington rattled world markets in September. The 3.75 percent left the German benchmark index at 4,303 points.
The news wasn't much better in London and Paris, where stock indexes also plummeted to nine-month lows.
Trouble for Sommer
Telekom led the downward march of blue chip stocks in Frankfurt on Friday. After hitting the €10 euro mark exactly at 10 a.m. Friday, the stock Telekom chairman Ron Sommer (photo) said a few weeks a good was still a good deal, dropped to finish at €9.84.
The bad news will affect everyone from the small-time Telekom shareholder to the highest rungs of the German government, which holds a 43 percent share in the company.
Government officials had already been making noise about dismissing Sommer, who has been unable to halt the 27-month slide of Telekom stock. Investors and government officials hold Sommer responsible for the 67 million euro in debt Telekom has ammassed, comparable to the debt amassed by Tunisia or New Zealand.
Financial reporters said on Friday that the sentiment on the trading floor seemed to be the sooner Sommer stepped down, the better.
But the head of Germany's association of small investors told the Süddeutsche Zeitung that a quick change was unlikely.
"If the government said that Sommer wasn't the right man, then that would be an admission of fault," said Markus Straub. "They defnintely don't want to do that before the elections."