When an Irish company loses its chairman and chief executive, its chief financial officer and 85 per cent of its value in two weeks, heads tend to turn. When that firm is as successful as CBT, the educational software company firm feted by Wall Street since its Nasdaq flotation in 1995, the shockwave travels far and fast.

Above all, other businesses want to know what such a collapse means, if it signals similar problems for other technology companies and whether it will have a wider effect.

They want to know whether the rapid departure of Mr Jim Buckley and the return of Mr Bill McCabe is a bold move designed to send the company back to higher ground, or an indication of a deeper malaise.

In fact, most analysts take the view, on the information they have, that despite CBT's announcement that sales were soft and it had lost a $6 million contract, the company is still financially sound. They add that the collapse was a once-off with no consequences for other software firms and no other effects.

But while the turbulent history of CBT shares over the past few weeks appears to have been caused by several factors occurring at the same time, it does also contain clear warning signs for others.

The first element contributing to CBT's fall was the company's success. CBT was the darling of Wall Street technology investors, ratcheting up revenues and profits above even the most optimistic of analysts' expectations, and had done so for 14 financial quarters in a row.

This attracted many "momentum investors" - those willing to place money in a company only while it is moving forward rapidly. That changed CBT's shareholder base and increased its price-to-earnings multiple.

"A lot of momentum investors own the stock and had driven the multiple. Any time there's a break in earnings, momentum investors sell stock, and that puts tremendous selling pressure on the stock," says Mr Howard Block, a leading technology analyst with BancBoston Roberston Stephens.

Another element was CBT's business model, which was based on one-third of revenues coming from new contracts, one-third from renewals of existing contracts, and one third from ongoing contracts that had already been signed. This highly-transparent model pleased investors, but it accentuated their shock when something they had presumed would always be there - large new contracts in a growing market - was suddenly absent. Then there was the growing world economic crisis, giving Wall Street what Mr Buckley described as "a tremendous case of the yips".

"Now you have a changed perception in the business; you have a changed multiple because the growth rate looks slower, you have changed estimates from the company, you have a big change in the shareholder list because momentum investors need to sell, and you have a sensitive market. So all these things together have meant a volatile mix which has led to stock being down 80 per cent," says Mr Block.

A further problem for CBT, says Goodbody Stockbrokers analyst, Mr Gerry Hennigan, is that the doubts about the company's thirdquarter profits emerged in the "closed period" between the end of the accounting period and the announcement. Under stock exchange rules, companies are severely restricted in the information they can release during these weeks.

"That's part of the reason there's nervousness out there - because they can't explain the story," he says. "Based on the limited information we have to date, we have downgraded our forecast for this quarter and for the fiscal year. We'd see that they will have difficulty sustaining the growth model that they had before. We're saying that the company is still in line for decent growth, but less stellar than it has been before."

He also says that some investors are punishing CBT for saying to analysts, as recently as September 14th, that its business was "where we expect it to be".

But while all of this could seem at first glance merely to be a series of cruel coincidences for CBT, some observers say it actually indicates a worrying ostrich-like tendency amongst analysts.

Mr Chuck Hill, an executive with First Call, which tracks market expectations, says despite the obvious knock-on effects from the relentless bad news in Asia, Russia and Latin America, many analysts have not updated their predictions.

"One of the big problems is that the earnings estimates for the next few quarters are way too high. Unfortunately, so far in this downturn, the analysts have only been cutting numbers for the current quarter and not much further out each time," Mr Hill says. "They cut the first-quarter numbers but left the remaining quarters pretty much where they were, then they came along and cut the second quarter, now they're cutting the third quarter. We're seeing lately some spill-over into the fourth quarter, but the numbers are still way too high for the fourth quarter and they have hardly touched the first and second quarters of 1999."

The average growth expected by analysts for the Standard & Poor's 500 companies next year, he points out, still shows growth increasing 14 per cent in the first quarter and 19 per cent in the second.

"That just ain't going to happen. It's ridiculous," he says.

In other words, because many analysts just update their predictions quarter by quarter, the market seems destined to be surprised by the same bad news, again and again.