Negative business announcements such as redundancies, profit warnings and liquidations have reached their highest level in two years, according to figures from KPMG.
However, the IT industry has emerged relatively unscathed compared with the other sectors, the market watcher has claimed.
The figures, compiled by Mandis Information Services, revealed that the total number of negative announcements between the months of February and April 2006 increased by 36 per cent to 1,296, compared with 952 in the same period in 2005.
Negative announcements in the UK technology sector increased by 14 to 67, compared with the same period last year. The UK telecommunications sector also witnessed an increase of nine announcements, up from 16 to 25 during the same period.
Philip Davidson, head of restructuring advisory at KPMG, told CRN: “The technology market is not that bad when you compared it with other areas, such as the public sector.
“Competition in the UK is becoming increasingly fierce, forcing UK markets to become more competitive with other countries. This causes cost pressures that can’t be passed on to end-users.”
The report also identified increasing energy prices and difficult trading conditions as two of the underlying causes to the increase in negative announcements in the UK.
However, Richard White, director of public-sector sales at distributor Centerprise, said the IT and telecommunications markets should not yet be too concerned about black clouds swamping the IT sector.
“There probably are more negative announcements occurring this year than last,” he said. “But companies that adapt their business model to market changes will survive. Those that don’t, won’t.”
The results of KPMG’s report are similar to that of recent figures published by The Insolvency Service, which revealed the level of company liquidations and individual bankruptcies had risen by 8.5 per cent year-on-year in the fourth quarter of 2005 (CRN, 13 February).
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