Ilion's share tumble reduces mighty roar

Distributor Analysts express concern as stock continues to decrease.

Networking distributor Ilion has horrified analysts and investorsse. after its shares suffered a massive freefall in its value which saw the distributor's stock dip below the #1 mark.

The shares, which on 28 May last year hit a high of 410p, slumped to a low of 93p on 26 May this year and dropped further to 90.5p on 1 June.

The plunge in value follows a profit warning issued on 14 May, the second in a six month period, stating that the distributor's #8 million expectations for its interim results would now fall between #4.5 million and #7 million.

Sandy Cals Summers, analyst at Dataquest, said: 'This is a horrific drop. Usually, a company is given 10 per cent each way on its expectations but it is not generally given a range.'

Wayne Channon, chairman of Ilion, said: 'I think the share price is too low. It is not anywhere near the value it should be.'

One investor commented: 'The shares dropped by 75 per cent. It is early days but there are structural issues.' A representative for 3i Group refused to comment on its investments but said it was watching the distributor.

Meanwhile, it has emerged that Bay Networks has given the go-ahead to Ilion to sell kit to US reseller NECX, despite admitting that the vendor would lose out on a significant chunk of commission.

According to David Parker, regional manager at Bay Networks: 'We sanctioned the transaction. We told Ilion it could sell certain products to NECX.'

Graeme Allan, UK managing director of Bay Networks, said: 'We are aware of the NECX situation but I will not go into anything else.'

Channon added: 'When we have goods to get rid of, we second source to companies. NECX has a UK subsidiary to sell to.' However, when contacted, NECX said it was based solely in the US but had an affiliation with Ctech in Ireland which only handles logistics and marketing.

Neither Allan nor Channon would confirm the value of these transactions to NECX, but sources claimed the value of kit shipped at the beginning of this year ranged between $5 million and $8 million.