Shares in Saville Systems plunged on the Nasdaq yesterday, the third time in eight days that a company based in Ireland has tumbled on the index.
Saville, which has its headquarters in Galway but runs much of its business from Burlington, Massachusetts, prompted the run on its shares by issuing a profits warning.
The company said its results for the first quarter of this year would be below expectations, with sales between $30 million (€28 million) and $32 million, and a net loss of between five and nine cents per share. Analysts had predicted net profits of around 24 cents a share.
By the close of trading last night, Saville had dropped from just over $10 to $5.62, a drop of $4.44 on the day. Less than a year ago, Saville shares were trading at almost $60 each.
Last Tuesday, shares in Irish clinical trials company ICON plummeted after the firm said its profits for the year to the end of May would be significantly lower than analysts' expectations. On Thursday, software company Iona Technologies said it would not meet its numbers for the first quarter of the year and might post a small net loss per share. The company's share price also fell rapidly, losing half its value in a day.
Saville Systems, with its headquarters in the IDA Ireland business park at Dangan, Galway, develops and sells billing and customer care software products for the telecommunications industry. On a conference call yesterday, the firm's chairman and chief executive, Mr Jack Boyle, said new licence sales were adversely affected by a lengthening of the sales cycle, due in part to uncertainty caused by recent consolidation by competitors as well as delays with UNIX customers.
"We are obviously disappointed that we closed significantly less business than anticipated this quarter," Mr Boyle said. "Although our visibility remains limited by continuing uncertainty associated with current market conditions, we do expect revenue and earnings growth for the year."
He also signalled the possibility of a legal dispute with telecommunications company Cellular South, which was a customer for Saville's UNIX-based program: "We are confident that the system developed specifically for Cellular South meets our commitment under our agreements, and we believe there is no basis for their actions (in terminating the deal)."
In January, Saville announced record results, with revenues for 1998 up 57 per cent at $167.7 million. Net profits rose 13 per cent to $27.1 million; excluding a once-off charge, the net profits figure was $36.5 million, or 90 cents per share.
In an interview published in the latest edition of Billingsworld, a trade magazine, Mr Boyle said: "We are a cash-positive company, and we have always been a cash-positive company. Things are going in the right direction."
The company was founded in 1982 and is well-established as a provider of billings and customer care products for telecommunications and energy companies. It has offices in the United States, Canada, Ireland, Australia, Britain and Germany, with some 1,400 employees.
