Alterian in second profit warning
Thursday 14 April 2011
Marketing software group Alterian has been thrown into further turmoil after shocking the market with a second profit warning in just over a week.
The company – which is currently rudderless after founder and chief executive David Eldridge stepped down in the wake of the first warning – has been hit by a "perfect storm", it said after carrying out an internal review.
Alterian first announced last Tuesday that a major client haddelayed re-signing its contract, prompting full-year profits to halve to £4m. After further work on pulling together the company'sannual accounts in time for next Monday's results announcement, the board revealed that profits would be "materially" lower than the levels suggested on 4 April.
In a statement to the market yesterday, the company said: "Theexpected further shortfall arises from both revenue and routine operating costs in comparison with market expectations."
The news rocked the market, sending Alterian's shares plummeting more than a third. They had already dropped 19 per cent after the initial warning.
Analysts at Megabuyte said the warning was strange as there had been no obvious catalyst, such as a downturn in the market. They said that incoming financial director Guy Millward blamed a "perfect storm of higher sales costs relating to new products but not enough sales in the final quarter to cover that additional cost".
Megabuyte added that the company was now even more likely to become a takeover target, "assuming the wheels aren't completely falling off". Panmure Gordonanalyst George O'Connor said the latest warning should intensify calls for the company to be sold from a "murmur to a crescendo". Yet he added that with the business looking "stuck in a hole, buyers are more likely to be cheeky bids from financial buyers".
Alterian, which makes software that allows clients to monitor what is said about them online, initially said it would miss forecast revenues of between £42m and £44m by a tenth, adding the majority would translate on to its profits, previously predicted to be £8m. Analysts now expect revenues to fall further to around £37m.
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