SDL issued a warning this morning saying that profits are likely to be £3m-£4m below market expectations for the year ending December 31 2012. The announcement follows a review of the business by Mark Lancaster who retook the reins as CEO last month (see SDL changes back to the old guard).
Profit before tax and amortization is expected to be £36m-£37m on revenue of £270m-£272m. A more cautious view of the language services business in H2, including the cost to complete certain contracts, is expected to account for £2m of the shortfall. The rest is being attributed to market conditions, and poor sales and marketing execution. The company can address sales and marketing even if it cannot alter the macro economic situation. However, language services has long been a profitable growth engine for the company so this does ring an alarm bell. Nevertheless, Lancaster has proven his ability to lead SDL in the past and the review shows he has handle on the business.