Iona shares dive after profit warning

Shares in Iona Technologies slumped 22 per cent yesterday as the Irish software company announced its fourth profit warning in just over three years.

Iona, which has been one of the most successful indigenous technology companies for more than a decade, said it would post a wider loss than expected for the second quarter, which ended June 30th.

The firm said it now expected to make a loss of four to six US cents per share for the second quarter on revenues of between $15 and $15.5 million. This is considerably below the company's previous expectations. Last April, it forecast revenue of between $17 and $19 million.

The profit warning sent its shares tumbling 92 cents in early trading on the Nasdaq to $3.14. Its share price recovered later to close at $3.62, a fall of 11.27 per cent.

In a statement released prior to its second-quarter results, Dr Chris Horn, Iona co-founder and chief executive, said that "market adoption of new technologies had been slower than expected".

Weak sales for the firm's new Artix product proved to be the major problem during the quarter. Iona signed just two Artix software deals in the quarter as potential customers remained cautious about the technology, which enables firms to link software systems together.

Dr Horn said Iona remained confident about the product's future prospects. He said there was no engineering problem with Artix, rather it was a question of positioning it in the market place.

The firm's failure to boost licence sales for its Artix software may lead to further speculation about its future as an independent firm. Last year, following a separate profit warning, analysts speculated that Iona's weak share price could make it a prime takeover target.

"The middleware market is becoming more mature and it is difficult to compete with the big players," Mr Gerry Hennigan, analyst with Goodbody Stockbrokers, said yesterday. "It is more difficult to carve out a niche than it was a few years ago."

Iona has endured a difficult three years since the technology market slumped in mid-2001 and provoked a restructuring programme that has reduced Iona's staff from more than 1,000 people to 350 in 22 offices worldwide.

Last year Dr Horn re-assumed the position of chief executive to lead the firm through its crisis.

In an analyst call yesterday, Dr Horn said he believed the second-quarter results did not reflect the strength of the firm.

Iona's shares closed in Dublin down 14 per cent at €3.