Logica, the IT services and software group that has shed almost 100 staff in the Republic this year, posted a 25 per cent drop in annual profit yesterday and warned the outlook for its business was tough.

Shares in Logica plunged 17 per cent to a six-year low following the result's announcement, when it said it saw no end to the global technology spending slump that has hit business and wiped 80 per cent off its shares this year.

A world leader in mobile phone text messaging, Logica has found it extremely difficult to break into the very latest technology to send pictures, video and audio clips. It warned yesterday that it may make further job cuts if the business climate does not recover.

Logica chief executive, Mr Martin Read, said it was hard to predict when conditions would improve for Logica, which had been a star of the UK technology sector during the boom in 2000.

Logica said it had cut jobs in the Republic from 538 last year to 462 by June. A spokesman said if the company met targets, it was hoped no further redundancies would be required in the Republic.

However, it is likely the company will consolidate its two Dublin offices to save money. The firm is in the process of closing its Cork operation.

Logica said its main IT services unit - which offers consulting, systems integration and outsourcing and which accounts for a bulk of its revenues - faced a difficult market.

The company said its mobile networks business, which includes the text messaging software in which it has 50 per cent market share, remained depressed as telecoms firms cut back spending.