Misys downgraded as banks review IT budgets

Misys downgraded as banks review IT budgets

Shares in Misys dropped in morning trading after UBS analysts downgraded the UK banking systems vendor from 'neutral' to 'sell' following concerns that financial firms are reviewing IT budgets.

Following the downgrade Misys stock slipped from 235.25 pence to 220.75 pence before rising slightly to 224 pence in mid-morning trading.

UBS analysts warned clients that banks are reviewing all spending programmes closely which could lead to lower licence sales for Misys.

A Marketwatch report states that UBS has forecast a hefty 20% decline in treasury and capital markets licence sales in the first half of 2008.

Fears of a decline in enterprise IT spending triggered a general sell-of in tech stocks on Wall Street yesterday. Investors got the jitters after a downbeat state of the market assessment from Cisco chief John Chambers, who pointed in particular to "dramatic decreases" in banking orders.

The first signs of a possible tail-off emerged in early September, when dealing room vendor Tibco warned of a sudden drop in license sales at the end of its third quarter, spurring some analysts to suggest that that the ongoing credit crunch may be hitting bank IT spending budgets.

Katherine Egbert, an analyst with Jefferies and Co. noted: "Although Tibco is a relatively small vendor, their third-quarter results could be a first glimpse into a potentially larger slowdown in financial services spending."

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