Markets whack Phoenix shares

Phoenix IT Group shares took a dive this morning after the company told markets this morning that business was on track, but it still has some worries about public sector cutbacks.

Sales and profits from the end of last year, from 1 October, were in line with expectations. The Servo business it bought in 2006 had a decent third quarter and it saw good growth in hosted and cloud services. Phoenix IT Group shares in London were down just over 12 per cent on the news.

The statement said: "We continue to face price pressure in the partner division, some of which is attributable to the Government's cost cutting measures.

"The pipeline for larger contracts in the partner business has some good early prospects, however it is unlikely that any of these will be commenced in the next six months."

The integration of ICM/Servo is going well, and the two firms should be working as one by 1 April 2011.

The board of directors expects trading next year to be similar to this year.

Go here for Phoenix's full trading statement. ®