German Stocks Drop, Led by Infineon on Loss; Carmakers Fall

By Stefanie Haxel

Dec. 3 (Bloomberg) -- German stocks declined for a second day this week after Infineon Technologies AG reported a wider- than-estimated loss and carmakers said U.S. sales dropped.

Infineon, Europe’s second-largest chipmaker, plunged 30 percent to a record low after posting the seventh straight quarterly loss. Bayerische Motoren Werke AG and Daimler AG, the world’s biggest makers of luxury cars, slid at least 2 percent as the shrinking U.S. economy hurt sales. MAN AG sank 4.2 percent after saying it will cut production on slumping truck orders.

“We are in a recession and those are the cyclical sectors where you can see this best,” Christoph Riniker, a European strategist at Bank Julius Baer & Co. Ltd. in Zurich, said in a Bloomberg Television interview. “More bad news will come and also indicators in general will point to a recession.”

The benchmark DAX Index retreated 1.8 percent to 4,452.21 as of 3 p.m. in Frankfurt. DAX futures expiring this month declined 2.3 percent. The broader HDAX Index slipped 1.6 percent.

Germany’s DAX Index is down 45 percent this year as almost $1 trillion in credit-related losses and writedowns at financial firms worldwide push the global economy toward a recession, damping the outlook for earnings.

Infineon slumped 30 percent to 1.165 euros, the lowest since the company’s initial public offering in March 2000. The fiscal fourth-quarter net loss widened to 763 million euros ($969 million), compared with the 321 million-euro median estimate of analysts surveyed by Bloomberg.

Revenue will drop in the fiscal year through September 2009 as global demand wanes and prices fall, Infineon said today.

Recommendation Cuts

Analysts at Royal Bank of Scotland Group Plc, Commerzbank AG, Deutsche Bank AG and Natixis SA cut their recommendations on the shares.

BMW, the world’s biggest maker of luxury cars, fell 3 percent to 19.06 euros as vehicle deliveries in the U.S. declined 27 percent last month. Daimler, the second-largest, slipped 2.7 percent to 22.94 euros after saying U.S. sales by its Mercedes- Benz Cars unit dropped 38 percent.

MAN lost 4.2 percent to 32.37 euros. Europe’s third-largest truckmaker will rein in commercial-vehicle production next year and shut plants for as many as 50 days during the first half of next year as the global credit crisis erodes demand.

E.ON AG, the country’s biggest utility, retreated 2.6 percent to 24.96 euros. RWE AG, the second-largest, declined 1.6 percent to 62.25 euros.

Credit Suisse Group AG reduced its forecasts for energy prices and said investors should prepare for a prolonged lull as economic growth slows, hurting earnings at European utilities.

The following stocks also rose or fell in German markets. Symbols are in parentheses.

Arcandor AG (ARO GY) surged for a second day, climbing 17 percent to 2.22 euros. Germany’s biggest department-store owner proposed appointing Karl-Gerhard Eick to replace Thomas Middelhoff as chief executive officer as of March 1.

Conergy AG (CGY GY) lost 9.1 percent to 1 euro, dropping for a third day. Germany’s second-largest solar company said Dresdner Bank AG purchased 155 million new shares in a sale that concluded yesterday, where the bank was one of the underwriters.

Constantin Film AG (CFA GY) rallied 8.4 percent to 17.45 euros after receiving a squeeze-out request from Highlight Communications AG. The Swiss film-licensing company now holds about 97.83 percent in the German maker of movies and television programs.

Medion AG (MDN GY) gained 1.1 percent to 5.39 euros after the distributor of personal computers and mobile navigation systems said it will buy back as much as 2 percent of its own shares, adding to the percent it had acquired through October.

SAP AG (SAP GY) lost 1.2 percent to 25.58 euros. WestLB AG lowered its share-price projection for the world’s largest maker of business-management software 17 percent to 20 euros.

Separately, Chief Executive Officer Henning Kagermann told Handelsblatt the company may give quarterly forecasts in future rather than an annual outlook.

Software AG (SOW GY) dropped for a third day, falling 1.8 percent to 38.14 euros. WestLB AG downgraded Germany’s second- largest software company to “hold” from “add.”

Zapf Creation AG (ZPF GY) tumbled 8 percent to 1.50 euros. Europe’s largest doll maker cut its 2008 outlook on disappointing Christmas season sales it said were due to the weak economy.

To contact the reporter on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.