IONA Technologies' profit warning last week, which prompted a fall in its shares, has raised questions over the strength of its finance and sales functions, NCB Stockbrokers has said.

In a research paper on the company, it queries the reasons cited by Iona for increases in expenses, asking why these could not have been accurately foreseen. NCB also questions Iona's assertion that market demand remains robust.

"We are unconvinced that the shortfall was not in part, at least, attributable to a slowdown in the market, albeit perhaps temporary in nature (Y2K related). "Furthermore the group must have had difficulties in signing small contracts as well as large scale enterprise contracts, given the size of the shortfall," it says.

NCB says the recent share price decline could prompt Iona to initiate a share buy-back programme "Indeed, given Iona's technological leadership and the highly fragmented nature of the market, any further share price weakness could stimulate corporate interest in the stock."

Although NCB says Iona's projected $5 million (€4.63 million) shortfall in revenue is its main concern, the extent of the group earnings shortfall is also worrying. However, the brokers say they believe Iona has not lost market share and recommend investors to hold the stock.