Xansa dives 52% after fourth profits alert

Shares in the IT services company Xansa plunged 52 per cent yesterday after continuing tough market conditions forced it to issue its fourth profits warning in 10 months, sparking fears of fresh job losses.

The Hemel Hempstead-based company, which hosts its annual shareholders' meeting today, said customers were delaying spending on IT projects. That, it said, meant its results for the six months to the end of October would be "slightly below" recent expectations followed by a flat second-half performance.

Xansa stock, which had traded as high as 885p at the peak of the internet boom in early 2000, slumped 38.5p to close at 35.5p last night.

"Market conditions in the IT services sector remain extremely tough," the company said, adding the current environment was characterised by "cutbacks in IT development spend, client deferrals of large projects and increasingly lengthy contract negotiations".

UBS Warburg, the company's broker, slashed its profit forecast for Xansa to £27.6m from £43m for the year to the end of April and to £31m from £50m for the year after.

Alistair Cox, who became chief executive of Xansa at the beginning of August, said he hoped to announce a streamlining of the business in the next three months – a move that is likely to mean job losses among Xansa's 5,600-strong workforce. It announced 350 redundancies last year.

"My priorities are to secure, grow and convert our pipeline of new contracts whilestreamlining our organisation to provide ever greater focus on our clients' needs at the most effective cost," he said.

While Xansa said it had been short-listed for several major contracts and was in talks on a number of other projects, it said it was assuming only a "small number" of those would be signed off this financial year.