Tower stock crumbles in N.Z.

By Alex Frew McMillan
CNN Hong Kong

The drastic decline of Tower's shares drove the broader New Zealand market lower Monday

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WELLINGTON, New Zealand (CNN) -- Stock in fund manager and insurer Tower Ltd. almost halved in value on Monday as investors punished a gloomy forecast from the company.

Shares in the Wellington-based company plunged 44.2 percent to NZ$1.98 after it warned it will likely post a loss for the year and not pay a dividend.

Tower said Friday it expects to post a loss of between NZ$30 million and NZ$40 million ($15 million to $20 million) for the year ended in September, not including writedowns it expects to make for Tower Australia.

The market had been expecting a profit of up to NZ$77 million.

The company identified Tower Australia as the "major contributor" to the year's poor result, with heavy costs for restructuring and poor market conditions both hitting its bottom line.

Tower's poor performance has led to the company being dubbed "Faulty Tower" by investors, a pun on the popular John Cleese television show "Fawlty Towers," in which anything that could go wrong, did.

Looking for a new leader

The company said on Friday that it is "well advanced" in its search for a new CEO, after longtime chief James Boonzaier resigned in July.

It said the acting CEO of Tower Australia, Andrew Moon, has stepped down, being replaced with Jim Minto, who headed the New Zealand operations. The company also named Paul Hunt as acting CEO of Tower New Zealand.

Tower plans to release its full-year report on December 5.

Analysts had been expecting a profit of NZ$77 million. They expect the company to show large writeoffs on the Australian financial-planning firm Bridges, which it bought in September 2000.

Stock watchers said they were particularly angered by Tower's announcement because the company gave a relatively positive forecast when it conducted a roadshow a little over a month ago.

Tower's large decline forced Wellington's benchmark Top 40 index into the red for the day, down 0.17 percent despite gains of more than 2 percent for most Asia Pacific markets. (Midday roundup)

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