Didata crashes back to earth after profit warning

South African IT services company Didata saw £1bn, almost a third of its market value, wiped out late yesterday as investors reacted to a warning of a slowdown in demand.

The company, which depends on reselling networking equipment for the bulk of its revenues, said yesterday that operating margins would be squeezed by one to two per cent for the financial year.

Speaking to the Financial Times, Didata chairman Jeremy Ord pointed out that manufacturers had squeezed margins from the top to fill their order books.

The news is bound to raise questions about two recent share sales by directors amounting to £2m.

The company's profit warning was in stark contrast to its bullish attitude during its last quarterly results when it boasted a 40 per cent rise in profits on the equivalent quarter last year and promised that its revenues would remain stable.

Didata had drawn some criticism for its aggressive acquisitions policy after it paid $450m for US internet consultancy Proxicom in May and $400 for Cisco reseller Chernikeef last year.