"The market is undoubtedly pretty miserable at the moment," said James Wickes, Ideal's managing director. He said excess supplies of disk drives and other hardware products had forced down prices and squeezed margins.
Ideal shares fell 40p to 235p as the company warned that its third-quarter trading levels were "significantly below the comparable period for last year" although it said fourth-quarter results had improved.
The warning is the latest disappointment in a gloomy year for Ideal. In March, the company's share price fell sharply as it complained of the unpredictability and volatility of the global IT market. The shares, which peaked at close to 800p late last year, have since lost almost three-quarters of their value. The statement mirrors gloomy predictions from large US computer manufacturers such as Compaq, which have also been hit by price competition and a market slowdown.
Nevertheless, Mr Wickes pointed out that the company had made massive improvements to its business. "We're feeling quite happy about the future," he said. In a statement, Ideal said its performance for the full year would be in line with market expectations.