Shares in Swiss-Swedish engineering group ABB fell by 57 per cent today after the company warned that mounting compensation payments could force its American subsidiary to seek bankruptcy protection.
Last night ABB - Europe's biggest engineering company - said it would not reach its earnings target in 2002 because a hoped-for market recovery did not take place in September and the effects of a cost reduction programme were taking longer than planned.
Trade union representative said they expected a fresh round of job losses. The company cut 12,000 from its workforce of 150,000 earlier this year in the most recent drive to save $500 million in annual costs.
Investors and analysts turned their ire on new ABB chief Mr Juergen Dormann. Mr Dormann last month added the ABB chief executive title to the chairmanship he took in December in a palace revolution that removed the Swedish old guard at the top of the Swiss-based group.
Analysts took flight after ABB's failure yesterday to provide fresh earnings guidance after putting under review its medium-term targets.
ABB's woes have cast a fresh pall over the standing of Swiss industry. Life insurance group Swiss Life had to restate its earnings twice for calculation errors and bank Credit Suisse Group faces lawsuits in the US over alleged conflicts of interest in its equity research.