Horizon shares plunge on warning

Shares in the internet services group, Horizon Technology, plunged on the Dublin and London markets after the group warned that sales and earnings in the second half of this year - and all of next year - would be lower than market expectations.

Although trading volumes in Horizon shares were very small, the impact on the share price was dramatic.

In Dublin, the shares fell 29 cents (23p) to €0.50 and in London the shares were down 29p sterling (47 cents) on 50p.

Turnover was 540,000 shares.

Horizon shares had recovered strongly in recent weeks on the basis that the bulk of its restructuring was complete, so yesterday's latest profits warning came as a major shock to the market.

The only consolation is that the shares did not drop to this year's all-time low of €0.38.

Analysts said yesterday's statement came as a shock as it had been generally assumed that, with most of the group's restructuring completed, Horizon was back on a slow upswing.

But the group made it clear yesterday that, despite the lower costs post-restructuring, revenues and earnings would be down sharply.

Horizon said revenues in the half-year to the end of December would be down almost 10 per cent on last year's corresponding period.

The company added that there was no reason to expect any strengthening in market conditions in either half of 2002 and a 15 per cent downturn in sales was likely for 2002.

The company has also warned that it will re-evaluate goodwill on acquisitions and it is likely that a further impairment provision will be made.

An impairment provision means a company has either accepted that it paid too much for acquisitions or that the assets acquired are not as valuable as was first thought.

Horizon floated in December 1999 at €1.46 a share and reached a high of €14 in the first quarter of last year.

Since then - apart from a short-term recovery in mid-1999 - the shares have been in virtual freefall.

From an opening level of €7.50 this year, the shares reached the €0.38 low in early October before rallying.