Shares in Peking University-backed Founder Holdings fell 18.52 per cent yesterday after it warned of a 'substantial' first-half loss. The counter dipped as much as 26 HK cents to an intra-day low of HK$1.09 before recovering slightly to close at a 52-week low of HK$1.10. The software-maker's surprise profit warning said the loss followed an unexpected slowdown in its non-media systems integration business, especially in the banking sector. Sources said this was due to the loss of the unit's key client, Industrial & Commercial Bank of China, to IBM. A delay in the completion of certain sales contracts in the business and over-expansion could also be blamed for the interim loss, the company said. Founder has been aggressively expanding the unit in a bid to diversify its revenue sources outside China's saturated electronic publishing sector, in which it has a market share of about 90 per cent. The expansion began after the acquisition of financial systems integrator Beijing Order in 1999. Analysts estimated the company had increased the unit's staff by about 40 per cent over the year. Founder said the business accounted for 40.5 per cent of the company's HK$2.08 billion turnover last year, and contributed 57.8 per cent of its HK$193.73 million operating profit. Analysts said the profit warning was a big surprise as the company had not indicated any substantial changes in its operations. Management had even indicated to analysts that its HK$100 million full-year profit target was achievable. Analysts were forecasting a full-year profit of between HK$34 million and HK$143 million, with a consensus of HK$86.71 million, according to Thomson Financial First Call's survey of 18 brokerage firms. Brokers expected investors to continue punishing the company on the surprise warning and predicted further downside in the share price.