Misys still waiting for banking upturn

Technology stocks were under pressure today after software group Misys said conditions remained challenging in its key banking and finance markets.

Misys said annual revenues would be 10% lower than a year ago, adding it was continuing to miss out on large IT projects as banks kept a tight rein on costs.

Profitability also came under pressure during the 12 months to May 31 with operating margins down 2% on the previous year, the company said in a trading update.

But executive chairman Kevin Lomax said its performance had picked up since the start of December in the form of higher orders and significant customer wins.

Shares in Misys slumped 9% in the wake of the update, dragging larger tech company Sage nearly 3% lower as investors took a negative stance on the sector.

Misys employs more than 6,000 people worldwide and supplies the international banking and securities, US healthcare and UK retail services industries.

It also carries out transaction and claims processing for UK physicians and UK independent financial advisers (IFAs).

Analysts expect Misys to post pre-tax profits of £90m (€136.9m) when it delivers its final results on July 22, down from £119m (€181m) in 2003.

Barclays Stockbrokers said Misys was heavily dependent on the spending plans of banking and financial services companies.

These firms were likely to keep a tight rein on budgets during 2004 and focus on lowering costs, while there were signs that Misys has lost market share in the investment banking area.

“As a consequence, we see little to spur growth for Misys, at least over the next six to 12 months,” Barclays said.