Shares in RM plummeted nearly 60 per cent yesterday after the supplier of computer equipment to schools and colleges issued its second profit warning in four months.
The alert, which came less than two weeks after the company announced Richard Girling was stepping down from the role of chief executive, wiped £125m off RM's value. Its shares closed down 132.5p at 92.5p – their lowest in about six years. At the peak of the internet boom in early 2000, they had traded as high as 1047p.
The company said it now believed profits in the financial year to 30 September were likely to be less than half the £16.3m achieved in the previous year. Turnover, it said, would be about 15 per cent lower than last year's £242m at about £205m.
The company blamed a delay in launching two key software products as well as changes in government spending for schools. It also said the computer hardware market continued to be "difficult".
RM now expects a greater proportion of government spending on education will go on high-speed internet connections in schools rather than computers and software.
Tim Pearson, who was originally due to take over from Mr Girling in early April, became chief executive with immediate effect yesterday. He will carry out a review of the business which will be published in May.
He denied the severity of the warning had exposed any problems within the company's financial reporting structure and would not be drawn on how the company's 1,500 staff might be affected by his review.
RM's house broker, UBS Warburg, slashed its forecasts for the current year. It is now predicting profits of just £4.8m – a downgrade of £13m. It also cut £11.7m off its profit forecast for the following year to £7.9m. "It is still early in the year, and we believe that there is still considerable uncertainty about the exact outcome," UBS cautioned.
RM said trading in the first three months of its financial year was "in line with plan" but said order intake weakened in December and January and was "significantly" below the same period last year.Reuse content