Danka shares plunged 292.5p to close at 217.5p, valuing the company at pounds 493m. Last night, traders said the shares could fall further tomorrow if the selling continued on Nasdaq, the US exchange where Danka shares have a dual listing. About 85 per cent of Danka's shares are held by US investors.
Martin St Quintin, the chief executive of Danka's European operations, said the company had overstretched itself with the acquisition of Kodak's Office Imaging business (KOI), which it bought for $688m (pounds 420m) last September. "We underestimated the complexity of the task and overestimated the speed at which we could do it."
Mr St Quintin said that, despite Danka's assurances at the time of the acquisition that no salesmen would be made redundant, it had struggled to hold on to key sales staff in the US. "We've introduced a new management structure and a new pay plan. That's very unsettling for some people."
The group lost 10 per cent of its US sales force earlier this year and the need to train junior staff has held back sales. "The sales force just did not hit the numbers. They seem to have gone into a deep freeze," Mr St Quintin said.
Danka anticipates that revenues in its third quarter, which ends on 31 December, will range between pounds 490.8m and pounds 496.8m - pounds 30m short of previous expectations, while earnings per share will be between 4.75p and 5.33p.
The slowdown will also dent Danka's full-year profits. For the year to March 1998, the group now expects revenues to range from pounds 1.99bn to pounds 2.03bn and earnings per share to fall between 23.6p and 24.6p.
Analysts last night slashedprofit forecasts for the company and said the share price was unlikely to recover until the company could prove it had successfully integrated KOI.Reuse content