Irish e-learning company SmartForce has issued a profit warning and cancelled its proposed merger with US software company Centra.
The company added that costs will have to be reduced to ensure its return to profitability.
SmartForce now expects first quarter revenue of around $42million significantly below previous forecasts of $67 million. The proposed Centra merger has been shelved by mutual agreement following Centra’s disappointing results, the company said.
In an open letter to customers and investors Smartforce’s chief executive Mr Greg Priest expressed his disappointment with the results.
Mr Priest said: "This is a very difficult climate for enterprise software companies generally, and e-Learning companies in particular, and our transaction rates in the first quarter were substantially below our expectations.
"That means we have no choice but to reduce our operating costs substantially so that we can operate profitably until our market and our business begins to recover."
He said the company remained committed to its strategy of creating broad based learning solutions.
Mr Priest said "This year is not about the next cool thing. It's about performance, scaleability, usability and return on investment. This year needs to be about making all of the different pieces that we've put in place work simply, consistently and powerfully together."
He concluded: "We knew coming in that 2002 was going to be a challenging year. We were right, and it's just got more challenging, and some of the steps we have to take will be painful.
"But we are going to take them, and we are going to come out of 2002 stronger than we came in, just like we did last year, the year before and the year before that."