Logica shares tumble on gloomy outlook

Logica shares tumble on gloomy outlook

Shares in Logica have tumbled after the UK company reported a decline in fiscal first half organic revenues in financial services and forecast only modest second half growth for mobile networks.

In first half figures for the six months ended 31 December 2001, Logica reported profits before tax up 21% at £78.5 million (2001: £64.8 million) and basic earnings per share up 18% at £0.13.

However, the market focussed on the gloomy prognosis from Logica managing director and chief executive Martin Read: "Having delivered strong growth in messaging during the first half, we expect growth in mobile networks in the second half, compared to last year, to be at best modest."

Mobile messaging has been the engine of growth for the UK computer services group over the past year. By late-morning, Logica's share price had slipped by £0.90 to £4.02, losing 18% of its value over the previous day as investors downgraded the stock.

In finance, where the vendor has struggled to retain its influence in a contracting market, conditions became even tighter as customers focussed on improving cost-to-income ratios.

The only bright spot for financial services was the UK, which notched up 23% revenue growth in the first half. Logica says it has made "significant progress" in developing long term service business from banks in this sector.

However, this was counterbalanced by weak results from continental Europe and the US. Logica blames a decline in European revenues on short term cost reduction measures for key clients in both France and Germany, and forecasts only modest growth in the second half as banks continue to curtail investment

In the US, an already poor market, the company says its financial services business was "paralysed" in the aftermath of the terrorist attacks in September.

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