Software firm Sema Group, one of Britian's top IT companies, shed almost half its value this morning after it issued a profit warning, delivering another sickening blow to the European technology sector.
The stock lost 45% of its value, hitting a three-year low and bringing down the whole London market in the first 30 minutes of trade, after it said profits for the year would fall short of the market's forecasts and its own expectations. The news confirmed fears that a hoped-for recovery in IT spending after the Y2K scare would turn out to be a false dawn for the industry, whipping up a wave of selling.
Incredibly, Sema was spared the worst of the investor backlash in Europe. French telecoms and electronic equipment maker Sagem crashed, losing 97% of its value after issuing a sales warning last night. Sema shares dived to 350 pence, down 43.5% on yesterday's close.
Sema partly blamed a major deterioration in the third-quarter performance of LHS Group Inc, a German-American software house it acquired this year for $4.7 billion, for its failure to deliver much growth in the second half of 2000. It also forecast a weaker-than-expected performance in outsourcing, where second-half revenues were now expected to be some 10% lower than the second half of 1999.
Sema forecast like-for-like revenue growth of 12% in 2001 as the group continued to focus on the faster growing segments of the IT market, but that falls well short of the giddy growth once expected by investors.
Sema's shares have now plunged 76% in three months, mirroring a sea change in sentiment toward the IT sector. The company said profits before amortisation in the second half were expected to be broadly in line with those for a year earlier. Turnover was expected to rise some 13%. The group insisted the outlook was promising, but no-one in the market seemed to be listening.
