Ixchange Technology Holdings has issued a profit warning relating to its US subsidiary, FrontRange Solutions.
The Ixchange share was hammered on the JSE after the news was released, plummeting 50% or 225c to 225c by midmorning. Almost 1.44 million shares were traded by 10am. At one stage the share traded as low as 216c.
The group says preliminary financial information indicates that the US sales, marketing and customer support software developer will report revenue of about $40.8 million and an operating loss of $14.1 million for the six months to 31 December.
This is different to management`s indications at the quarterly review to the investment community in October, where the budgeted revenue and operating loss were forecast at $47.5 million and $6 million respectively.
Chairman and CEO Dana Buys said at the quarterly review that FrontRange, formerly GoldMine Software, had invested heavily in marketing, and research and development.
"In the first quarter to end-September 2000, FrontRange Solutions boosted significantly its investment in marketing from 19% to 31%, compared to the first quarter of the previous financial year. We also more than doubled research and development spending to 16% of revenue, compared to 7.4% in the same period the previous year."
Ixchange says that "while preliminary results for FrontRange Solutions, when compared with guidance given to the investment community, are disappointing, revenue growth in comparison to prior periods is encouraging".
The group is expected to report its interim results on 26 February.
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