The UKcomputer software market is moving towards
recessionand one in five companies could
disappear, according to analyst Plimsoll.
The Plimsoll study looked at how the UK slowdown is already
affecting the software market.
The full analysis, to be published on 1 May, has drawn on the
latest figures for each of the UK's top 2,000 companies in the
software market.
Headline figures show over a third of companies are already
showing signs of recessionary behaviour and reporting declining
sales. This is immediate evidence that the market is slowing down,
said Plimsoll.
Over half of companies have seen their margins fall. Over a
quarter of these are running at a loss.
These companies are struggling against rising costs and
declining sales, Plimsoll said.
The analyst said 40 of these firms have seen an increase in
their need for short-term finance, a sign that costs are running
ahead of cash flow.
This is dangerous at a time when
banks and financiers are looking hard at their loan books,
placing these companies in an even more vulnerable position.
As many as one in five software companies could disappear
completely if this trend continues or deepens, Plimsoll
predicted.
David Pattison, an analyst at Plimsoll, said, "I hope this
report is recognised as an early warning sign and managers read
this and use the findings to steer a course though these tricky
times."