The collapse in the price followed the company's announcement that it would lose between pounds 3.5m and pounds 3.8m in the half-year to September, compared with a pounds 2.3m loss last year.
The poor performance is the latest example of a recently quoted company shocking shareholders with a profits warning soon after coming to the market. Others that have left investors with burnt fingers include McDonnell Douglas Information Systems and Aerostructures Hamble.
Videologic said price-cutting by personal computer manufacturers had put pressure on margins in the three months since flotation.
Trading in the shares was relatively thin and one analyst said investors who had taken the shares on the basis of Videologic's competitive lead in video technology were sitting tight.
When Videologic came to the market its prospectus included more than two pages of health warnings about the risks of investing in a company that was still developing its products and had yet to secure any sizeable orders.
But its performance since flotation is likely to lead to further criticism by fund managers of the merchant banks that have brought a series of high-technology companies to the market this year only for them to disappoint.
Profits warnings in the sector have been made by Clinical Computers, DRS Data, McDonnell and Azlan.
Rumours have been circulating that some influential fund managers have threatened to boycott the new issues market completely following the recent spate of flops.
Scottish Widows denied that it had put in place such a ban, but warned it would be much more discriminating in future and would invest markedly less in the new issues market.
One merchant banker said: 'I have never known a situation like this. It's the worst I've known things for around eight years.'
Despite the halving in its value since flotation, Videologic's 45p issue price, which valued the company at pounds 61.5m, was much lower than original expectations of between pounds 70m and pounds 84m.
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