Iona Technologies, the Dublin-based technology firm, will shed at least 125 staff from its global operations to cut costs, the company confirmed yesterday.

Iona, which issued a profit warning last month amid sliding software sales, said about 20 employees would lose their jobs at the firm's Dublin offices.

An Iona spokeswoman said the firm had decided to reduce its workforce to fewer than 700 staff, down from its current global workforce of about 825 people.

She said the exact number of redundancies had not yet been decided.

Staff had been told on Monday evening that there would be redundancies, she said.

Iona's announcement was widely anticipated following comments by chief executive, Mr Barry Morris, last month that substantial job cuts would be required to return the firm to profit.

The company, which is perhaps the Republic's best known technology firm, shocked the market in July by announcing that revenue slumped almost 50 per cent in the second quarter of 2002 compared to the same period 2001.

At the time of this announcement, Iona, which employs 200 people in Dublin, also said it would take an $8 million (€8.16 million) restructuring charge in the third quarter.

Mr John Coolican, technology analyst with Merrion Stockbrokers, said the level of redundancies announced was not unexpected and would include software engineers and sales people.

"Iona is a very engineering focused company and pride of place is given to its R&D function but the reality of the situation is that it won't avoid the cuts," he said.

"But the firm must balance the need to cut costs with reducing disruption to its sales cycle. Iona has long sales cycles sometimes extending 12 months so if it fires salesmen it could lose sales."

Iona shares jumped more than 6 per cent yesterday in Dublin to close at €2.45.

But in the US, Iona shares were down 2 per cent at $2.09 as the Irish market closed.

Iona develops software that links different computer systems together. Its clients include some of the biggest global corporations.

But it has been hit hard by the current economic downturn which has persuaded many of its customers to delay signing any deals.

The company's current market capitalisation of about $68 million is significantly below the firm's cash reserves of $100 million.

Mr Barry Morris: "substantial job cuts required"