Shares in Iona Technologies slumped 15 per cent yesterday following the publication of results which disappointed the market.

The Dublin-based software company reported a net profit of $190,000 (€158,796) for the three months to the end of March 2004, its first quarterly profit for two years.

In the equivalent quarter 12 months earlier, Iona reported a net loss of $11.9 million as it struggled to restructure its operations.

Despite the share sell-off, Dr Chris Horn, Iona's chief executive and founder, said it was a great result for what was typically a difficult quarter for Iona.

He said Iona signed a one $1 million-plus deal during the quarter and 12 deals of $250,000 or more.

Iona reported revenues worth $16.8 million in the quarter, a slight fall from the first quarter 2003 when it made $17 million.

The majority of this revenue, some 95 per cent, was generated by products based on Iona's core software, Corba.

Just 5 per cent of revenue was based on Iona's latest product Artix, which has generated interest from analysts.

Iona said it expected the proportion of its revenues based on sales of Artix to be between 5-10 per cent in the second quarter.

Operating expenses were $13.7 million in the first quarter 2004, down from $24.7 million during the first quarter 2003. Net profit per share was $0.01 in the three months to the end of March, up from a loss of $0.36 on last year.

Even though the results were in line with Iona's guidance for the quarter, investors sold the firm's shares heavily yesterday.

Iona shares plunged more than 16 per cent to close at $6.85 on the Nasdaq, where the stock is mainly traded. In Dublin the shares closed down €1.35 at €5.70.

Mr Gerry Hennigan, analyst with Goodbody Stockbrokers, said the market had built up very strong expectations for Iona over the past few months. These had not been reflected in the results, which showed little sign of licence revenue growth, he said.

Davy Stockbrokers said it did not think the share price weakness was justified and it did not envisage making any significant changes to its revenue forecasts.

But it would be upgrading its earning per share forecast for 2004, the stockbroker said in a note.

Iona said it expected revenue for the second quarter of 2004 to be in the range of $17-$19 million, which would represent a 5-15 per cent growth on the previous year.

Total expenses, including both cost of revenue and operating expenses, would be in a range of $17-$18 million.

Iona's range of Corba software products helps firms, such as Boeing, to integrate their information technology systems.

Its new product, Artix, enables companies to deploy Web services in order to increase efficiency and use the internet in their operations.

Iona employs 342 people in the US and the Republic, down from more than 1,000 in mid-2001.