 |
|
| CURRENT SECTION :: Jobs | UK's most visited IT Contractor Site - 250k unique visitors March 2008 |
|
 |
Predictions that the economic slowdown will force the scaling back, delay or outright cancellation of software projects in Britain’s corporate sector have come true. In fact, profit warnings from FTSE-listed firms in computer services and software hit a new peak in the first quarter this year, according to a new report by Ernst & Young. Thirteen profit warnings were issued by 13 IT and software companies in the first few months of 2008, up 44% from the 9 warnings in the last quarter of 2007, says the report, obtained by CUK yesterday. It shows that as a “reflection of current market conditions”, all the outfits, which had a turnover of under £200m, blamed “sales short of forecast” as the main reason for their warnings. James Bennet, Ernst & Young’s technology director, explained the first quarter figures come on the back of a good year that saw growth for most software and IT services stocks. But the progress has been “marred,” he said, and the squeeze on computer and software firms is likely to remain. Currently, 8% of the sector has been hit by profit warnings. “Technology stocks have been pretty hard hit, with organisations selling to the financial services sector particularly feeling the pinch as many projects have been put on hold,” Mr Bennet said. “Broadly, confidence in the marketplace is affecting spend and delays in projects going ahead will be affecting clients now and in the future.” Less business for software and computer service providers has trickled down to squeeze related sectors, the report shows. It notes 7 profit warnings from IT hardware and equipment makers in the first quarter this year, up from 3 in the last quarter of 2007. These firms represent 14% of the sector. “The reason for so many profit warnings is a result of confidence in the marketplace being hit, instability in the financial markets and companies generally being cautious about committing to significant spend,” Mr Bennet said. “There is likely to be significant slippage with companies over the next 6-12 months.” Across all sectors 114 profit warnings were issued by UK quoted companies, the highest first quarter figure since 2001 and up 11 per cent from the start of last year. Reflecting on these figures, the report authors said they were “a clear indication of the growing impact of the current downturn.” Despite the perceived gloom for the IT and software services sector, 17 quoted companies issued profit warnings this time last year. The decline in number indicates that the sector has improved the accuracy of its sales forecasts, despite these now being undermined by wider economic factors. Apr 22, 2008 Email this article Printer friendly page Previous Page
|
|
 
|
||||||||||||||||||||||||||||||||
| All content © Contractor UK Limited | [Register for News Letter] | [Privacy Statement] | [Terms of Use] | [Top of Page] |