Software sector 'worst performing in UK'

The software and computer services sector was the worst performing sector on the UK stock market last year.

Top 10 software stories of 2007

Check out the software stories that made waves last year here.

The research by Ernst & Young covered all listed companies in the UK and found 56 profit warnings from 43 companies in the software and computer services sector - 26 per cent of the sector up one from 2006.

Delays or discontinued negotiations were the biggest reason for the warnings, with most coming from smaller companies as a result of over reliance on too few products or customers.

This was against a background of 107 warnings by UK quoted companies, the highest quarterly figure since the last quarter of 2001, a 22 per cent increase on the same period in 2006.

John Hughman, senior technology analyst at Ernst & Young, warned the problems could continue next year as IT vendors curb their spending in wake of the global credit crunch.

But Hughman said the difficulties were not a reflection on the sector as a whole.

He said in a statement: "2007 has generally been a good year for UK software and IT service stocks, reflecting the wider strength in the global technology market."

There was also a fall off in the number of warnings in the software and computer services sector during the final quarter of 2007, falling from 15 to nine.