A gloomy update from Spirent Communications and heavy falls from ARM Holdings and Imagination Technologies dragged the tech sector lower on Thursday.

Telecoms testing group Spirent fell as much as 14% before the close of trade after warning that fourth-quarter sales were at the bottom end of guidance, as slower US demand counterbalanced a strengthening in Asia and Europe.

The company also said a number of senior management and structural changes have been effected "to deliver a streamlined, decentralised and more simplified business", with full details to emerge with result on February 27th.

Chip designer ARM was also falling sharply after Deutsche Bank lowered its rating for the stock from 'buy' to 'hold', saying that consensus forecasts for 2014 look too high.

Research analysts Johannes Schaller and Kai Korschelt still believe that ARM remains "one of the best secular growth stories in the sector". However, after a strong finish to 2013 they said that the share price is now ignoring "several risks", including an ongoing mobile semi-conductor inventory correction, rising competition from US counterpart Intel and a historically-high valuation.

Deutsche Bank kept its 'hold' recommendation for smaller rival Imagination but said that market-share losses are likely to continue in 2014 with ARM continuing to gain share in mobile graphics.

"We do not see current R&D and operating expenditure levels as sufficient to stabilise the company's market position vs ARM. With IMG's IP roadmap and market share as well as earnings growth uncertain, we maintain our cautious view."



Top performing sectors so far today
Construction & Materials 4,545.95 +1.94%
Fixed Line Telecommunications 4,457.08 +1.00%
Real Estate Investment Trusts 2,566.00 +0.45%
Pharmaceuticals & Biotechnology 11,700.21 +0.41%
Electricity 9,097.32 +0.27%

Bottom performing sectors so far today
Technology Hardware & Equipment 1,169.04 -5.36%
Industrial Metals & Mining 1,291.83 -2.82%
Forestry & Paper 10,555.93 -2.29%
Food & Drug Retailers 4,273.53 -2.17%
Mining 15,501.16 -2.12%

BC

Related share prices
ARM Holdings (ARM) share price
Spirent Communications (SPT) share price
Imagination Technologies Group (IMG) share price