Online retail giant Amazon's own delivery service will more than halve the growth potential for Royal Mail's parcels business, the former state-owned British company said on Wednesday, sending its shares lower. Hargreaves Lansdown Head of Equities Richard Hunter says Royal Mail faces the harsh realities of fierce competition.

SHOWS: LONDON, ENGLAND, UK (lNOVEMBER 19, 2014) (REUTERS - ACCESS ALL)

1. HARGREAVES LANSDOWN, HEAD OF EQUITIES, RICHARD HUNTER, SAYING:

JOURNALIST ASKING RICHARD HUNTER: 'Kicking off with Royal Mail, I mean, these were at the top end of expectations but it's disappointing and parcels are facing fierce competition of course we had that big who-ha about these shares being undervalued when they started trade, what do you make of it all?'

HUNTER: 'Yeah, I mean since last October when the company was initially floated I think it's fair to say that the share price euphoria that we saw has now been replaced by the harsh realities. Quite apart from the pressure Royal Mail faces which is unique to itself in continuing to have to provide the universal postal service its main growth area is of course the parcels business on the back of online shopping but that is not only a fiercely competitive arena anyway. But, of course, Amazon has been quietly emerging in terms of building up its own business there and if you actually look at the metrics operating profit going in the wrong direction as indeed was the margin and the return on capital. Slight bright spot in terms of the dividend yield its projected yield is about 4.4 percent which of course if healthy given the current interest rate backdrop. But I think the jury remains out on this particularly aggressive market place in which Royal Mail operates.'

JOURNALIST: 'Just looking at some of the other numbers, I mean we had easyJet yesterday, it did well on the back of that, it's up again today. I mean I guess the consensus is Q3 was pretty good this side of the Atlantic and the other side of the Atlantic. How much support is that giving the overall market?'

HUNTER: 'Yeah, it's one of those positive catalysts we have been looking for, certainly in terms of S&P companies. About 75 percent of them beat expectations. One of the reasons of course why the S&P indices have been closing at record highs recently. In terms of the UK it has also been a strong third quarter reporting season, the problem we have got in terms of the FTSE 100 of course is its very make up. If you add together the mining sector, the banking sector and the oil sector you are talking about nearly 40 percent of the FTSE 100 by capitalisation. Needless to say each of those three sectors for different reasons have had a particularly tough year that has meant a drag on the index such that in the year to date we are actually down about 50 points on the FTSE 100.'