Other big fallers in the sector included mmO2 down 7 per cent and Vodafone down

Other big fallers in the sector included mmO2, down 7 per cent and Vodafone, down 3 per cent.CMG and Logica in particular have come under intense pressure lately. City analysts have expressed particular concern over their exposure to the mobile phone sector.Both firms have divisions that sell technology to the mobile phone operators enabling them to offer their customers text messaging services.Mobile phone makers, such as Nokia and Ericsson, and mobile phone operators, including Vodafone, are suffering the double whammy of weaker customer growth and the uncertainty of the transition to new services.Lucy McFetrich, an analyst at Merrill Lynch, now expects CMG to make a £36.9m pre-tax profit in 2002, compared with her previous forecast of a £60m profit. The bulk of the downgrade, however, was due to continued pressure in the firm’s IT services division, she said, noting: “We are pushing back our expectation of a recovery in the IT services industry into 2003.”For the following year, Ms McFetrich predicts CMG will make a profit of £57.5m, down from her previous expectations of a profit of £102m. The bulk of the downgrade for that year was prompted by concerns over its Wireless Data Solutions, or text messaging, business.CMG, which has been competing for next generation text messaging contracts, known as multimedia messaging service or “MMS” contracts, was widely expected to land a deal with Vodafone.

Ms McFetrich said yesterday, however, that she was “more sceptical” of the likelihood of CMG winning many significant major new contracts this year. “We understand that Vodafone is now unlikely to announce a second MMS supplier alongside Ericsson,” she said.She believed a similar UK contract with Deutsche Telekom’s mobile phone business T-Mobile was unlikely to go CMG’s way.. Britain is hovering above recession for the first time in a decade, shockingly bad official figures showed yesterday that are likely to keep interest rates on hold for some months to come. “That needs to be corrected immediately because it keeps interest rates at an inappropriately low level.”In our view rates need to go up now, but following this number they probably won’t go up for a couple of months.”A spokesman for the Treasury said: “It is very early days and these figures will be revised twice and are likely to change.”.

The troubled disaster recovery firm Guardian iT yesterday finally agreed to a cash takeover by its rival, the US company SunGard, in a deal worth £167m. Cox, a distressed Lloyd’s of London insurer, yesterday saw a dramatic reversal in fortunes after it announced that Esure, the company founded by insurance guru Peter Wood, is taking a stake in the business. The deal is part of Cox’s share placing and open offer to raise £73m.Mr Wood, who chairs Esure, enjoys legendary status in the UK insurance industry for founding Direct Line – now part of Royal Bank of Scotland – which became the UK’s biggest motor insurer by selling policies over the phone.Cox’s shares lost four-fifths of their value in recent months as it increased its estimate of liabilities from 11 September from £42m to £125m. Cox has enough money to pay these liabilities, but it intends to wind down its commercial lines business.The new money will be used to fund the expansion of its retail insurance side, which is chiefly motor insurance and fits with Mr Wood’s expertise.Investors had been sceptical of the plan, given the lack of success Cox has had on the commercial side. But analysts said the involvement of Esure, in which Mr Wood has invested a significant tranche of his own money, has restored some confidence.It may also lead to a closer relationship between Cox and Esure, including even Cox being swallowed up into the internet insurance business.Michael Dawson, chief executive of Cox, said: “This confounds the doubters.

The retail business was the jewel in the business and this should let it shine.”Cox’s retail motor insurance had one million customers and underwrote gross premium income of £476m in 2001. It has been profitable every year since it was set up 34 years ago. Cox also released results for 2001, showing an operating loss of £240m.. By unhappy coincidence, Britain tends to announce its figures for economic growth on the same day as the United States, and so it was yesterday. Soaraway growth of 5.8 per cent in the US for the first quarter compares with a miserable 0.1 per cent in the UK. Coming after the marginal contraction in the UK economy recorded for the fourth quarter of last year, this puts Britain perilously close to the official definition of recession – two successive quarters of declining growth.Most economists think the latest UK figure too downbeat, and are confident that eventually it will be revised upwards.