Software sector UK's worst performing in 2007

The software and computer-services sector was the worst performing on the UK stock market last year.

The research by Ernst & Young covered all listed companies in the UK and found 56 profit warnings from 43 companies in the software and computer-services sector.

Delays or discontinued negotiations were the most common reasons for the warnings, with most coming from smaller companies as a result of over-reliance on too few products or customers.

This was against a background of 107 warnings by UK quoted companies, the highest quarterly figure since the last quarter of 2001 and a 22 percent increase on the same period in 2006.

John Hughman, senior technology analyst at Ernst & Young, warned the problems could continue next year as IT vendors curb their spending in wake of the global credit crunch.

But Hughman said the difficulties were not a reflection on the sector as a whole.

Hughman said in a statement: "2007 has generally been a good year for UK software and IT service stocks, reflecting the wider strength in the global technology market."

There was also a decline in the number of warnings issued in the software and computer-services sector during the final quarter of 2007, falling from 15 to nine.