VTech Holdings shares went into a tailspin yesterday after a weekend profit warning by the consumer electronics manufacturer spooked investors.
Citing fierce competition in the North American cordless-telephone market and rising component costs, the company late on Sunday projected that its interim profits would be 'significantly less than the same period last year'.
Faster than expected price erosion and the poor purchasing performance of a large retail chain operator - of one of its key United States customers - had led to 'unsatisfactory performance' in its telecommunications product business.
VTech shares plunged 16.28 per cent yesterday to close at HK$12.85.
A company spokesperson said competitors such as GE, Matsushita's Panasonic and Uniden Corp of Japan had all begun aggressive marketing campaigns in a market hobbled by sluggish demand growth.
'This led to a price war. We cut our average selling price by 10 per cent,' the spokesperson said.