Shares in Iona Technologies fell sharply on Nasdaq after it said second-quarter revenues would not meet expectations as tough economic conditions persisted.

The software developer reported first-quarter revenues of $39.5 million (€44.46 million), in line with expectations, but down from $42.7 million a year earlier. It announced a pro-forma loss of $2.4 million or $0.08 per share compared with a profit of $0.15 per share last year.

Iona, whose software enables companies to integrate different computer applications, cautioned that the coming quarters would be "extremely challenging". It has withdrawn its guidance for the full year, which indicated revenue growth of 5 to 15 per cent.

The level of economic uncertainty means it can now provide guidance only for the second quarter. It expects revenues of $40-$43 million, below consensus forecasts of around $44 million, and a pro-forma loss per share of $0.02-$0.06 in that period.

"We came into the year with expectations of a modest recovery later in the year but we have not seen any evidence of that," Iona's chief executive, Mr Barry Morris, said. "The first quarter was very tough and we expect the June quarter to be equally tough."

The company said there was a lot of caution in relation to information technology spending. It was seeing greater scrutiny of transactions with more signatures required before approval.

However, Iona noted it had a strong balance sheet - it closed the first quarter with $111 million in cash and securities following a recent $60 million share placing. It signed nine transactions worth more than $1 million in the first quarter and 13 transactions worth between $250,000 and $1 million.

"We are in a strong position to take advantage of any economic upturn," Mr Morris said.

By the Dublin close, Iona shares were down 14.5 per cent at $12.83 on the Nasdaq. In Dublin, where trading in the shares tends to be lighter, they closed 4.6 per cent lower at €15.80.