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Technology sector slumps

Leading IT suppliershave seen 60% more profit warnings in the fourth quarter of 2008 compared to the fourth quarter of 2007.

Ernst & Young said that eight warnings were issued by seven companies in Q4 of 2008, rising from three in Q3, equivalent to 16% of the FTSE Technology Hardware & Equipment sector.

The FTSE companies in Software and Computer Services issued 10 warnings in the final quarter of 2008 compared to seven in Q3 and nine in the same period last year, Ernst & Young said.

"The credit crunch is finally catching up with IT companies.

"Revenue had remained remarkably resilient for much of the year but business cases for IT spend are now being seriously challenged and all but the must-do spend is likely to be challenged.We can expect more profit forecasts to come, and we are seeing few businesses that can forecast accurately in the current environment," said Karl Havers, partner and head of Ernst & Young's technology practice.


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