IT Services News

Profit warnings in the UK technology hardware and equipment sector rose by more than 60 per cent in the fourth quarter of 2008 and by the same amount when compared to the fourth quarter of 2007, according to research released today by Ernst & Young.
Eight warnings were issued by seven companies in the fourth quarter of 2008, rising from three in the third quarter. And total warnings rose from 11 in 2007 to 21 in 2008.

Companies in software and IT services issued 10 warnings in the final quarter of 2008 compared to seven in the third quarter, though when comparing annual totals, warnings for this sector dropped from 56 in 2007 to 39 in 2008.

Karl Havers, partner and head of Ernst & Young’s technology practice, said that the credit crunch is finally starting to catch up with IT support companies.

"Revenue had remained remarkably resilient for much of the year, but business cases for IT support spend are now being seriously challenged and all but the must-do spend is likely to be challenged," he said.

James Bennet, a director in Ernst & Young’s technology team, added that IT support companies had started cutting costs before things got very difficult in September, causing fewer profit warnings in the fourth quarter than might have been expected otherwise.