Shares in Misys have fallen sharply after the company reported a 13% drop off in half-yearly revenues from its banking and securities division and warned of continuing bank caution in IT spending patterns.
In a trading update released at mid-day GMT, Misys reported a 10% decline in first half group revenues due to weak market conditions in both the banking and securities division and the financial services division.
Total divisional revenues in banking and securities are expected to be down in the first half by 13% on the equivalent period last year "reflecting the continued weakness in market conditions and the effect of declining professional services revenues," says the company.
The statement continues: "Whilst we see evidence that bank IT budgets are starting to grow again after a period of contraction, banks remain cautious in initiating larger IT projects."
Misys shares dropped 80.7 pence from 297.50 to a low of 216.75 pence on the update, gaining slightly to reach 229.5 pence by mid-afternoon, a loss of 18.10%.
The company disposed of the UK back office products business of Misys Asset Management Systems and certain equities trading products from Misys Securities Trading Systems towards the end of the first half. From 1 June 2003 up to the date of their respective disposals, these businesses operated at break even on revenues of £13 million, says the firm, down from £21 million for the equivalent period last year and a profit of £2 million.
Initial license fee revenue in banking and securities was 9% lower than last year, while professional services revenue was down 16% sequentially, blighted by cutbacks in bank IT budgets.
Revenues in the financial services division are expected to be 16% below last year due to the continued weakness in the IFA network business.