Quality Software shares continue dive on warning

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Shares in Quality Software Products, the accountancy-software group, fell a further 125p to 355p yesterday following a profits warning on Monday.

The shares have lost half of their value in two days and stand below the 380p issue price when the company came to the stock market in 1993.

QSP issued no fresh information yesterday and no trades were recorded in the stock.

The Gateshead-based company has blamed its problems on the delay of contracts which it had expected to be signed last year but which have been delayed. This will cut around pounds 2.3m from profits. Further costs will be incurred as a result of staff rationalisation. Analysts have cut profit forecasts from pounds 3m to pounds 500,000 for last year.

Much of the re-organisation costs are associated with QSP's purchase of its US distributor Global Software last year. This was funded by a pounds 14.7m rights issue at 535p per share.

Global is based in North Carolina and linked up with QSP in 1994.

The relationship has proved a disappointment which QSP has blamed on Global's lack of working capital. The US accounting-software market accounts for around 35 per cent of the world total but has proved difficult for UK companies to crack.

In October QSP announced half-year profits of pounds 805,000, an increase of 30 per cent. However, some analysts have been cautious about the company as it capitalises research and development expenditure. But for this it would be making losses.