Profit warnings down in the UK IT sector

Fewer UK IT firms are cutting profits

Profit warnings among blue-chip UK IT firms were down in the second quarter of 2008 compared with the first three months of the year, according to accountant Ernst & Young.

Seven software and IT services suppliers posted nine warnings in the second quarter, down from 13 in the first quarter of 2008 and 15 in the second quarter of 2007.

Technology, hardware and equipment firms posted three warnings, unchanged from the same period last year, but compared with seven in the previous quarter.

However, the sector is not immune from the difficult financial climate and companies should be aware of the danger, said James Bennet, technology director at Ernst & Young.

“While the reduction in the number of profit warnings is certainly a positive improvement, this should not take away the challenging market conditions that technology firms are facing at the moment; some of the most difficult in the last five years," he said.

"With the overall downturn in the marketplace, it is likely that there will continue to be difficult times for technology companies.

“We would have expected to see tough times ahead for all organisations in this sector as a fuller extent of the global financial challenges played out in local markets."