Shares in troubled medical software maker iSoft started their long climb back yesterday after chief executive Tim Whiston effectively fell on his sword.
ISoft, which has its largest UK office on Aston Science Park, said Mr Whiston was quitting with immediate effect, just five days after telling analysts he was not planning to step down in the wake of profit warnings, a share price plunge and market speculation about financial problems at the company.
"After three profit warnings, major share sales, and his involvement in the accounting policies that led to the current debacle, we believe this news is likely to be taken well by the market," analysts at Numis Securities wrote in a research note.
ISoft shares have crashed to a tenth of their value last September amid concerns over delays to the multi billion pound project to upgrade information technology systems for the National Health Service and other issues.
US consulting firm Accenture, one of the groups involved in the NHS project which among other things will put records of 50 million patients onto computers, blamed iSoft in May for some of the delays, which the Government has said could stretch to two years.
"My primary concern is for the future success of iSoft and the welfare of its customers, management and staff," Mr Whiston said in a statement.
"I have become increasingly concerned that my continued role with the company may represent a source of negative speculation and comment, being an unhelpful distraction to those within it.
"It is with this in mind that I have taken the difficult decision to resign my post."
Following the announcement shares in iSoft, which started 2006 at around 400 pence, were up 1.8 per cent at 56.25 pence, valuing the group at about #131 million.
"While this should not be a surprise the shares might see some relief on hopes new management can raise morale and extract value from a company with an extensive installed base and attractive product portfolio," analysts at Bridgewell said.
The group said chairman John Weston would assume the duties of chief executive until a replacement was found.
Mr Weston said: "I am grateful to Tim for his efforts and his support since I arrived at iSoft last October.
"I believe that the business, despite the current difficulties, is a creative and innovative company that has the opportunity to build on a successful track record in healthcare software and develop its leading position in this market.
"We have a clear set of challenges ahead but with the necessary determination we will get through them."
Last Thursday, iSoft shares tumbled anew after it said annual profits would be lower than expected due to a change in accounting policy and that it was in talks with banks to change aspects of its banking facilities.
Company broker Morgan Stanley suspended its recommendation on iSoft shares that day, saying in a research note: "We don't feel that we have enough visibility to offer a recommendation."
Deutsche Bank slashed its price target on Friday to 55p, while on Monday, UBS cut its target to 43p from 62p.
ISoft is due to update on its progress on July 11 when it announces its full-year results.