The Investment Column: Misys

MISYS, Britain's biggest software group, has finally confirmed what market observers had long expected. It faces a slowdown of demand from its banking customers. The shares, already down 15 per cent from 12-month highs, fell another 10 per cent yesterday to 560.5p as analysts cut forecasts.

Part of the company's misfortune is that spending on Y2K and conversion to the euro created one-off gains last year. Now the first half of the current year is likely to suffer as banks shy away from upgrading millennium- ready systems.

Then there's Misys' plan to spend pounds 50m on building an Internet business. The strategy is to develop a twin portal. One strand will service independent financial advisers.

That should build incremental revenue streams offering decent future growth. The other strand will enable consumers to make more informed choices about, for example, ISAs.

Misys already has Internet experience through a joint venture which provides Internet services to doctors. Though the twin portal strategy unveiled yesterday will produce losses for several years, Misys will easily absorb those amounts.

The question is how the market will take a brief slowdown in banking software spending. If it becomes overly negative about this, and the shares begin to approach 500p, longer-term investors should consider seizing the opportunity.