Iona blames poor sales for $1.7m quarterly loss

Iona Technologies has reported a pre-tax loss of $1.7 million (€1.4 million) for the second quarter of the year, with poor sales of its newest product blamed for the performance.

The loss came as no surprise to the market, with the firm issuing its fourth profit warning in slightly more than three years at the start of this month.

Iona said yesterday that IT buyers had been even more cautious than previously about buying new technologies. This created problems for the firm's Artix product, which was launched last October.

The new technology allows firms to link their software systems together.

"What we're all seeing is slower purchasing behaviour and a slowdown in spending," said Iona chief executive Dr Chris Horn.

The second-quarter performance did not reflect the "energy or strength" of Iona, he added.

Iona posted sales of $15.2 million for the second quarter, which was in the middle of the range it indicated at the start of July.

New products contributed just 2 per cent of revenues, with the remainder coming from the firm's older CORBA business.

The company's cash levels remained healthy, with $55 million on the balance sheet at the end of the quarter.

Analysts said this gave Iona some stability but they questioned the potential for any future expansion.

Dr Horn said that while he felt unhappy with the quarterly performance, he remained "reasonably confident" of the market improving. "We're doing all the right things."

He said Iona was one of a large number of technology companies that had issued profit warnings over the past quarter. Mr Gerry Hennigan, technology analyst with Goodbody Stockbrokers, said he would not be revisiting his forecasts for Iona, which are based on a price target of $3.25.

Shares in the company closed at $3.45 on the Nasdaq last night, up 16 cents. They were steady at €2.70 in Dublin.

Mr Hennigan said Artix, which has now been on the market for three quarters, should have developed more "traction" at this stage in the cycle.

"I don't see where the growth is going to come from," he added.

Dr Horn acknowledged that any new product tended to have a window of just 18 months or two years to build a critical mass of sales but added that the firm was "nowhere near decision time" on Artix.

Iona has told the market it expects to record sales of between $15 million and $17 million in the third quarter.