Unsurprisingly, the duopoly of Reunert and Allied Electronics Corp (Altron) continues to dominate the electronics & electrical (E&E) sector. But despite this dominance, the crash in the equity market has hurt both of them.

Altron's market cap collapsed from R15,74bn to R7,64bn and Reunert's fell from R14bn to R9,98bn - when comparing the period to end-March 2007 with end-December 2008. Their share price rallies ended with Altron's falling 43% to R22,44 and Reunert 10% to R50,50 over the same period.

This fall in Reunert's share price is a far cry from the 40,33% rise that resulted in the price jumping from R61 at the end of June 2006 to its record closing high of R85,60 in early February 2007. Altron has also come way down from its record high of R80, reached at the end of October 2007.

Looking back, it is easy to understand the optimism. The local economy was doing well and there was a lot of easy credit around.

Now investors are skittish about the sector despite government's pledge to spend more than R700bn on infrastructure in the next three years. This is compounded by delays caused by firms such as Eskom and Telkom. They are driving the infrastructure development drive and have stalled the awarding of some contracts. Also, the collapse in commodity prices that has led to large stock write-downs has complicated the situation.

Altron recently said that its power generation subsidiary Powertech was expected to be hurt by the rapid decline in copper prices - which went from US$9 000/t to about $3 000/t - and had to reduce the value of its stock.

But aside from the collapse in commodity prices, the slowdown in the construction sector, which is the primary user of Powertech's energy cables, has dealt the group a blow. As a result, it is expecting basic earnings per share for the year ending in February to be 18%-30% lower.

The outlook for Altron has dimmed considerably since CEO Robert Venter gave a presentation on the group's interim results in October. Back then infrastructure spend was continuing and demand was expected to remain strong in the medium term. Looking at the group's results for the half year to end-August 2008, Altron's management had every right not to be too pessimistic. After all, revenue had grown by a healthy 19% to R13,1bn and operating profit rose 25% to R1,12bn.

But they saw the scale and speed of the global financial crisis and said they would take the precaution of focusing on "cost control and working capital management".

Altron was not alone in expecting the worst. Reunert says "all indications are that the half-year results for the period ending March will be down" and earnings per share and headline earnings per share should be 10%-30% lower. The short-term prospects might not look good but there are indications institutional investors see an upside to buying now. Equity funds maintained their holdings in Altron at R2,2bn, despite the drop in its share price.

Altron and Reunert's market cap may have shrunk but their domination of the E&E board has not. In last year's Top Companies survey they made up about 11% of the sector's market cap and this has not changed much. They are still dominant because all the other firms in the sector also took a knock.

Cabling and power group ARB's market cap, for instance, dropped from R1,19bn to R434,8m and vehicle tracking group Digicore's more than halved from R2bn to R947,2m.

They were not the only ones to have suffered. East London-based cabling company South Ocean's market cap shrank from R1bn to a mere R217,4m.

As with Altron's Powertech, a decline in the housing market and a slump in copper prices knocked the stuffing out of South Ocean. Revenue rose 33,3% to R1,13bn, but profits slumped by 28,4% to R132,7m for the year to end-December 2008.

The same goes for electronics group Jasco. Its revenue rose 16% to R603,3m, but profit before tax increased by a modest 3,4% to R51,3m for the same period. The firm recently took a stake in M-Tec, a cabling firm, but the partnership has not worked out for the best. The drop in commodity prices has resulted in it writing off R23m in stock. Besides a fall in sales volumes, the suddenness of the downturn also meant M-Tec could not reduce cost to match the pace of the shrinking economy.

Jasco CEO Martin Lotz is nevertheless optimistic about M-Tec's prospects. "We still believe the infrastructure spend is going to happen," he says. Companies are taking a wait-and-see approach to the global financial crisis, but he says at some point they will have to start spending again.

Lotz has good reason to be confident, but other companies in the E&E sector have just as much reason to be pessimistic. Control Instruments has not only seen its market cap collapse from R210m to R58m, the auto components supplier also had to deal with the fall in car sales, and its spare parts business has crashed.

Digicore has also not had a good run. Revenue fell from R309m to R288m, but it did manage to increase its net profits by 6% to R56m for the six months to end-December.

If there is a glimmer of hope in the E&E sector, then it has to be the turnaround of Delta Electrical Industries. A lot has been going right for Delta.

The most positive thing that happened is that the anti-dumping investigation led to higher tariffs being charged on more products from China - a leading competitor - on entering key export markets in the US and Japan.