Datalex shares sink further as aviation crisis deepens

Shares in Datalex, the Irish company that develops software systems for the travel industry, collapsed on the Nasdaq market yesterday on investor fears that the growing aviation crisis would severely hit Datalex.

In the opening session on Nasdaq, Datalex shares lost almost two-thirds of their value in heavy trading and by midday in New York were down 95 cents, on $0.55. This compares with a flotation price last October of $11.50 and a subsequent high of $11.69. In Dublin, where Datalex has a secondary listing, the shares fell 48 cents to €0.20 with 150,000 shares trading

The shares have fallen steadily since the flotation, but have been in virtual freefall for the past six months. The airline crisis is just the latest factor to damage investor confidence.

Normally, a couple of thousand Datalex shares trade daily on Nasdaq but in the first couple of hours yesterday almost 700,000 shares traded. At a price of $0.55, Datalex has a market value of $18 million (€19.45 million), even though its cash balances alone at the end of June totalled $72 million.

Datalex finance director Mr Liam Booth would not comment on the collapse in the share price, but sources close to the company stressed the strength of its balance sheet meant Datalex had the scope to ride out the current slump in the sector.

But analysts took a less positive attitude and one pointed out that two of Datalex's main products are targeted at airlines and corporate reservation systems, two sectors that may be hit most severely by the current crisis in the global travel industry.

Even before the crisis, Datalex had been forced to cut 170 people from its workforce as part of measures to reduce its quarterly cash spend to $11 million. At the time, Datalex chief executive Mr Neil Wilson said the company was on target to become profitable at the operating level in early 2002. Analysts said there was virtually no possibility of that target being met.

Mr Wilson's paper wealth in Datalex shares has fallen from a peak of €95 million at the time of the flotation to little more than €4 million at yesterday's price.