Iona Technologies has confirmed that it will lay off staff as part of an effort to reduce its operating costs by 10 per cent.  John Collinsreports.

The software company said it would provide more details when it announces its fourth quarter results on January 24th.

Chief executive Peter Zotto said Iona would ensure it retained its sales capability and may actually add staff in this area.

The news came when Iona issued a trading statement of the three months to the end of December.

The company expects revenues to come in at $18 million with expenses of $20.5 million.

At the announcement of its third quarter results last October, Iona had said that revenues for the fourth quarter were likely to be in the range of $20-22 million.

Mr Zotto blamed the shortfall on "weakness in the financial services market" which had resulted in a number of large deals for its flagship Artix software failing to close. Financial services companies make up the largest segment of Iona customers.

"I am as disappointed as you that our financial performance does not reflect the growth potential of Artix and our company," Mr Zotto said.

He said the company was "taking meaningful cost reduction actions" so that it could return to profitability this year.

Iona still has a strong balance sheet and expects to close the fourth quarter with a cash balance of $56 million.

In a later statement the company confirmed that the cost controls would include lay-offs.

"We anticipate a small headcount reduction in several locations," it said.

Following the news, the company's stock plummeted in Dublin trading. It was down 24 per cent, closing at €1.65, its largest one-day drop in almost five years.