Misys to cut jobs as shares plunge

The software and IT services company Misys said it was cutting 150 jobs from its core banking division, warning the unit's performance in the first half would not match last year's.

The alert, which wiped £675m off Misys' market value, is likely to end its two-year stint in the FTSE 100 index.

"Overall this division's order intake in the first six weeks of the new financial year has been in line with the equivalent period of last year, though with larger orders continuing to take longer to close," the company said, adding it thought customers would continue to exercise caution in signing off large projects.

That, combined with increased spending on new products, "is likely to mean that performance will be somewhat below last year in the first half," it said. Shares in Misys, which employs 5,800 people, closed down 27.5 per cent at 308p, the biggest faller in the FTSE 100.

Misys had already warned last month that profits from its banking division would be "slightly" beneath market expectations for the year to 31 May. The job cuts, announced yesterday, follow the decision to pull out of two consumer internet businesses last month with the loss of more than 100 jobs.

Analysts were, however, shocked by the news of a further deterioration and slashed their profit estimates. UBS Warburg, one of Misys' two brokers, cut its year to end May 2002 profit forecasts by 21 per cent to £128.5m and its 2003 profit estimate by 25 per cent to £153m.

Peter Wyatt, of Nomura, said: "Orders are not going away. The bad news, though, is that visibility is so poor."

Misys recorded a pre-tax profit, before exceptional items, goodwill and internet investment, of £140m, up from £123m the year before. Sales were £858.5m up from £708.8m.

Kevin Lomax, the company's chairman, said: "The international spread and mix of our business activities, together with the resilient nature of recurring revenues, will ensure we are well positioned against a background of weaker demand in the world economy."

Misys is paying a 4.29p dividend for the year, up from 3.73p last year.