Misys hammered by reluctant banks and weak dollar

Software company's shares tumble on earnings news

Software company's shares tumble on earnings news

UK software applications company Misys warned today that as expected its performance will be at a lower level than last year.

In a year-end trading statement, the banking, financial and healthcare applications group revealed that its turnover would fall by 10 per cent compared to last year to just over a billion pounds. Its shares promptly shed 9 per cent to hit 189p, but later recovered to 198p.

The company's banking division, once a market leader, was hit by what chairman Kevin Lomax called "challenging conditions". Banks are still reluctant to commit to major products, although the company signed a number of major deals in the second half of the year.

Revenue for its US-based healthcare division slipped by only one per cent to £297m, but this was due in part to changing currency exchanges - namely the strong British pound and weak US dollar. Organic growth, according to the company, was around three per cent with a seven per cent growth in licence revenues.

Misys reckons the widening currency differential hammered the division results by nine per cent.

Financial services revenue fell 18 per cent to £407m. Misys has new products coming on stream, but analysts at Ovum point out that the company is planning to sell this division "when conditions are right".

At the half year, Misys reported a 45 per cent drop in profits and warned that things would not quickly improve. The company is one of the few independent software applications providers with a global presence.

In the last six months it has announced major deals with companies in Europe including Germany's CC Bank, Santsander and Bayerische Landesbank and in the Far East including Bank of China and Mitsui.