Shares in Dublin firm Horizon Technology lost a quarter of their value yesterday following a trading update which warned its revenues would be at the lower end of expectations.

The firm, which provides system integration services and distributes IT products, warned that revenues at its British enterprise infrastructure operation would be below expectations, but this would be offset by an improvement in gross profit margins and cost reductions. Despite a challenging environment, the group's Irish operations overall will perform in line with expectations, according to the firm's stock market statement.

Overall, Horizon expects fully diluted adjusted earnings per share for the year to December 2002 to be at the lower end of the range of market expectations. It says trading conditions will remain challenging in 2003 and, therefore, forecasting revenues and earnings will remain difficult. Earnings growth will depend on an improvement in market conditions, the statement added.

Company shares initially slumped almost 25 per cent on the London Stock Exchange before recovering somewhat to close at 21¾p, a drop of 14 per cent on the previous close. In Dublin, the stock lost six cents to close at 34 cents, a 15 per cent fall.

Davy Stockbrokers expects Horizon's revenues to be 20 per cent lower than expected in second half 2002 due to the lower level of system integration deals won in Britain. The difficult trading environment and lower gross margins next year will mean a significant reduction in earnings forecast, it adds.

But cash management at the firm looks better than expected with the firm forecasting debt levels of below €11 million at year-end, according to the stockbroker. Horizon, founded in 1988 by tech entrepreneur Mr Samir Naji, has been hit hard by the prolonged downturn in tech spending by firms.