Orchestream cuts more jobs after missing sales targets

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Orchestream, the software company, yesterday reinforced the general sense of gloom in the technology sector when it revealed it had cut 84 jobs after missing its third-quarter sales targets. Shares in the company fell 6p, or 24 per cent, to a fresh low of 19p.

The company blamed its problems on its failure to finalise six deals, including five in the US. That meant third-quarter revenues would be £3.2m, 36 per cent lower than the company's earlier projections. In the second quarter, sales were £4.7m.

Ashley Ward, the chief executive, said he expected business to pick up in the current quarter. "Customer interest is high, but it is clearly harder to predict exactly when prospects will be converted into actual sales, particularly in the US. The medium-term prospects for Orchestream are as exciting as ever."

Orchestream, which cut 92 jobs last month and now has 252 employees, is not ruling out further job losses. It is to take a £1.6m exceptional charge against the cost of the latest cuts, which are expected to shave £2.4m from operating costs. The firm is expected to make positive earnings before interest, taxes, depreciation and amortization by the end of 2002.

Orchestream enables network companies such as British Telecom and Energis to re-configure hardware in their networks infrastructure. The company floated in June last year at 185p per share and saw its share price climb to a high of 692.5p. It has £26m of cash in the bank, against a market capitalisation of £24.9m.