ARC International, a chip designer, yesterday parted company with Bob Terwilliger, its chief executive, as it issued its second profit warning since floating on the London Stock Exchange a year ago.
Blaming difficult market conditions for the shortfall, ARC said it now expects third-quarter sales to be no higher than £2m, some £1.5m to £2.5m beneath current market estimates and beneath those recorded in Q3 last year.
Shares in ARC finished down 18.5 per cent at 37.5p, valuing the business at £103.5m – well beneath the half billion pound price tag its 210p flotation price gave it 12 months ago.
"The difficult market conditions affecting our customers' businesses that resulted in a marked slowdown in concluding licence agreements during the second quarter of 2001, have continued during the third quarter," the company said.
It is understood that Mr Terwilliger, who still holds options over 11 million shares and was paid $275,000 (£187,000) a year, was asked to step down after the board decided it needed a different person to move the company forward. Simon Poulton, finance director, said: "It would be wrong to link Bob's departure to anything specific."
However, Mr Terwilliger's exit follows the departures of a number of senior executives at the group. Jim Turley, who was in charge of technology strategy, and Ian Yates, in charge of engineering, both left recently. Rick Clucas, one of ARC's co-founders and chief technology officer, left due to health reasons and now works at Beeson Gregory. Bill Caparelli was recently drafted in to head up the company's worldwide sales push replacing Ken Lamb.
ARC had sounded the alarm bell on deteriorating trading conditions in July when it said it would miss its second quarter and half year estimates.
The company said yesterday that its cost reduction programme, under which it planned to cut 20 per cent of its 300-strong workforce, had been fully implemented.
ARC, which hoped to be profitable in 2003, would not give any guidance on when it hoped to break even. Analystshave halved this year's sales estimates to more like £11m.
"ARC was forced to warn on trading in Q2 because a number of contracts were not signed as expected. These contracts are still outstanding and we estimate that no new licences have been signed in Q3 so far," analysts at Equityinvestigator said.
John Stockton, who was previously ARC's non-executive chairman, has taken on the role of chief executive until a successor is found. Jan Tufvesson, currently a non-executive director, has been appointed non-executive chairman.
Noting that market interest in its technology remained "high", ARC said: "We remain confident about the longer-term prospects for our innovative technology." ARC will release its Q3 figures on 1 November.Reuse content