Misys stock dropped 51.5 pence, or 21.6%, to 187.25 pence, in early morning trading - the lowest level since September last year. The stock had recovered slightly by mid-morning, rising to 203.00 pence by 10.45 BST.

In a trading update, Misys says earnings at its banking division in the first half are likely to be significantly below last year and it is not certain that any profit shortfall will be fully recovered in the second half.

Misys says first half performance at its banking unit has been hit by a delay in revenue recognition and increased investment on product development and professional services capabilities.

Kevin Lomax, Misys executive chairman, says: "As contracts become larger and more complex, the timing of contract signing becomes less predictable and revenue recognition typically occurs over a longer period.

"In line with this trend, revenue recognition on a number of larger banking projects will now occur later than anticipated."

Analysts say that the company is paying the price for is over-reliance on the moribund investment banking market and lack of penetration in the growing retail markets. Investors are also questioning the performance of the management team. Recent investments in R&D aimed at revamping the firm's ageing technology platforms have failed to appease critics who argue that the firm has been caught on the back foot by nimbler rivals with more advanced technology.

On a more positive note, Misys says progress in its other businesses remains on track. Even at its struggling banking unit, the company says the prospect pipeline and order book remain strong.

In July Misys reported a healthy 17% increase in operating profit in the banking division for the year ending 31 May 2005, which rose to £43m, while revenues were up seven per cent at £238 million.

Maintenance revenues at £112m showed a more modest growth at two per cent ahead of last year. Professional services revenues also showed evidence of recovery and were 12% higher than the previous year at £46m.