LONDON -- Despite all the volatility, the shocks, and earnings results this month, the S&P 500 ended up little changed in July. In Europe, as concerns surrounding the sovereign-debt crisis continued to rage on, benchmark bond yields in Spain and Italy reached euro-era highs on fears the worst is yet to come. Elsewhere, concerns grew surrounding the LIBOR-fixing scandal and the involvement of some of the continent's largest financial institutions.
It is in this environment that we move to these five companies. These firms saw share their prices collapse during the month, and they may yet be set to offer potential selling or buying opportunities.
The French major Acatel-Lucent has seen a busy month of news in July, most recently reporting that it would cut 5,000 jobs in order to reduce costs after reporting a loss in the latest quarter. Earlier in the month, the company was hit after France Telecom said it was Alcatel's equipment that failed and caused the country's phone networks to be out for a weekend. The company is down 37% for the month.
Alcatel abandoned its full-year profit target after reporting a net loss of 254 million euros in the latest quarter, while net cash shrank by 517 million euros to 236 million euros. The company hopes the job cuts announced toward the end of the month should save it about 750 million euros, but to what extent this will help the firm turn around its ailing finances is not yet clear.
Telecom Italia, Italy's largest phone operator, was hit by a report mid-month saying the country's limits on its phone networks may be in violation of EU laws. Specifically, there is a law in place in Italy that separates the provision of access to the company's wholesale network from the activation and maintenance of lines -- something that has generally, if unintentionally, benefited TI, which is down 17% for the month.
Meanwhile, broader concerns surrounding Italy's sovereign debt had a knock-on impact on TI's corporate bonds, which saw a sharp drop-off in demand in the last weeks of July. The company suffered further after its CEO said that a ban imposed in Brazil, suspending sales from the company because of bad service, has cost it as much as $2.5 billion in market value.
Deutsche Bank has become embroiled in the LIBOR-fixing allegations during July, hit early in the month by a report from Morgan Stanley saying that it is set to face some of the highest litigation costs -- up to 1.6 billion euros -- of the 16 banks facing potential fines. DB ended the month down 16%.
The bank set aside $1 billion to cover its costs in legal fees and fines toward the end of the month, and it lost an additional 3% off its share price after it reported weaker-than-expected results: Net income dropped from 1.2 billion euros to 700 million euros year on year.
The French utility supplier Veolia Environnement has seen more than 10% of its share price shed in July, in large part because of concerns early in the month following a speech by prime minister Jean-Marc Ayrault, who said that the government will implement a massive plan of energy savings and will set up "progressive" prices for gas, power, and water.
Toward the end of July, Veolia has been offered some respite, with Highstar Capital agreeing to buy its U.S. waste management business for $1.9 billion, and in the last few days reporting it has agreed to sell its waste services unit in Estonia and Lithuania to Alexela Energia.
Banco Bilbao Vizcaya Argentaria
Banco Bilbao Vizcaya Argentaria managed to par some of the month's losses during the last weeks of July thanks to approval of the EU's planned 100 billion euro bailout for the Spanish banking industry. It did, however, start on a decidedly more negative note. Stock prices were pushed down by a large share issuance at the beginning of the month, which rose dilution concerns, and a downgrade from HSBC the following day. The company ended the month down 11%.
But broader concerns surrounding the Spanish debt crisis have been the name of the game for the bank. With benchmark 10-year bond yields reaching the highest levels since the year 2000 -- well into the territory that had nations like Greece seeking EU help -- the outlook for BBVA is very much dependent on what happens to Spain as a whole.
Buffett is still buying
This month's European trading has provided its fair share of ADR losers -- and perhaps some European buying opportunities. Indeed, legendary investor Warren Buffett has recently spent more than $1 billion buying a prominent European stock that has slumped this year. If you want to know why Mr. Buffett has bought into Europe, I'd encourage you to read "The One European Share Warren Buffett Loves," a special Motley Fool report that reveals the stock he purchased and the price he paid. You can download the report today for free, but hurry -- it is available for a limited time only.
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