Software developer iSoft is laying off ten percent of its staff and revising its accounts, in the wake of troubles with the multi-billion pound upgrade of the NHS IT system.
The re-stated accounts, which effectively reduced iSoft's recent profits to zero and sharply cut future expectations, have "thrown the future of the company into question," according to the Independent newspaper, and pushed iSoft into renegotiation with its banks.
"This is the latest in a string of negative announcements from iSoft ahead of its FY 2006 results," said Tola Sargeant at analyst group Ovum. "iSoft's share price is at another all-time low, as is confidence in the management team among investors."
iSoft, founded in 1994 by KPMG and once tipped as a UK success story, has lost 87 percent of its market value this year and announced a profit warning in January. The company is providing software for the NHS National Programme for IT (NPfIT), a multi-billion upgrade of NHS IT which has been beset by delays which have raised concern amongst academics, and cost Accenture £260 million.
"The redundancies in the UK are also worrying," said Sargeant. "While the company clearly has to cut costs, iSoft, which is already stretched, will need as many good people as possible to help get its NPfIT implementations back on track."
iSoft is renegotiating its contract terms with the NHS and financial matters with the banks. "Both of these discussions could have make or break consequences for the company," said Sargeant. "In the meantime, iSoft is looking more and more like a potential acquisition target."