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iSoft shares dive

Chris Barry
7/ 4/2006

SHARES in Manchester health sector software company iSOFT nose-dived last night as rumours that it was on the verge of losing a major contract with the NHS swept the City.

At one stage the stock was down by more than 45 per cent at 80p before a statement calmed the storm. The stock closed down 11 per cent at 130.75p.

"iSOFT is aware of market speculation regarding the financial standing of the company. The company believes this speculation is unfounded."

A company insider added: "The fall in the price was a surprise, we have no idea where this rumour came from."

In late January iSOFT said delays in its contract to provide software for the multi-billion pound NHS computer system upgrade were a result of rescheduling rather than problems with its software.

That announcement sparked a major slump in the share price from 360p to 230p. Last week the stock fell sharply again after US business consultancy Accenture blamed iSOFT for hold-ups in the NHS programme, which it claimed would cost it around '280m.

One analysts said: "There's a rumour that the NHS has pulled its contract with iSOFT.

"The implication is that iSOFT might get thrown off, which is not entirely surprising after what Accenture's been saying about them."

The company was worth '1bn at one stage but its market capitalisation is now less than '300m.

Some analysts have speculated that iSOFT, led by chief executive Tim Whiston, could become a target for a takeover bid in the wake of its weak share price, but would-be buyers may be put off by the latest setback. Accenture's contract covers the east and north east of England.

Last week it reported a 67 per cent slide in profits as a result of losses from building the new computer system which is set to transform the NHS by connecting more than 30,000 GPs in England to almost 300 hospitals.

Patients would also get access to their personal and health care information. A central computer system is seen as vital to the NHS as it would boost efficiency and help cut out the potential for errors as doctors treat patients for the first time.

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