In these difficult market conditions, surprises, and typically nasty surprises, are unfortunately rather too common.

However, the recent performance from Marconi wrong- footed even the hardened pessimists.

The company's problems stem from the slowdown in spending in the telecoms sector in general, a malaise that has now spread from the US to here in Europe.

Marconi provided analysts and investors alike with a trading update as recently as late May, when the company said it had remained reasonably immune from the general slowdown in the technology sector.

But over the course of the past six weeks conditions have apparently deteriorated to the extent that operating profits for the current year are now expected to be 50 per cent lower.

The fact that the share price then itself halved is more of a reflection of the sense of disappointment with the company's management than an analysis of the company's prospects.

Having said that, it is extremely difficult to make a forecast for Marconi, given the ongoing uncertainties in the markets in which it operates.

However it is said with some certainty that matters can hardly get any worse.

Its markets have fallen off a cliff, its management has lost a lot of credibility - indeed one has left - the dividend is under threat and the stock market has lost a lot of faith.

Coupled with a crashing share price, it could be argued that this is a classic buying opportunity, though the risks and uncertainty remain extremely high.

John Pearson - associate director

Gerrard is regulated by the Securities & Futures Authority. Share prices and the income from them can go down as well as up. Readers are advised to seek professional investment opinion before entering into dealings in securities mentioned in this article, which may be unsuitable in their personal circumstances.