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Shares in controversial online snooper Phorm crashed more than 40% today on news that it has been dumped by BT, the broadband giant that would have transformed the fortunes of the targeted advertising group.
The news comes less than a month after lossmaking Phorm raised £15 million in the City at 450p a share.
Today the shares crashed 192p to 282½p. In February last year they hit a peak of just over £35 so have now lost 90% of their value in 17 months.
Phorm has developed technology based on surveillance techniques that tracks the internet habits of consumers, and then trades that information to internet service providers.
This interest-based advertising has caused a huge storm and led to a European Commission investigation amid claims Phorm's software is a clear breach of individuals' privacy on the internet.
The company had been hoping to pull off a coup and get BT to sign up to its Webwise system. However, it has emerged that after trials BT has ditched Phorm.
A BT spokesman said: "We don't have immediate plans to deploy Webwise."
Phorm cut down its spending after its annual losses rose 50% to £30 million.
It dismissed the BT rebuff. "It is not a great surprise to us," said a spokesman. "Phorm is not just dependent on a UK model with one ISP."
But investors were today keen to know when Phorm learned that BT was not going ahead with Webwise.
In its recent stock market announcement of full-year results the company merely said BT had completed its first public trial of Webwise and "a number of lessons were learned from the experience".
In its placing announcement which was put out to the Stock Exchange by financial advisers Canaccord Adams, Phorm's founder and chief executive Kent Ertugrul spoke of "enthusiasm from publishers and internet services providers".
Ertrugul is Phorm's largest shareholder with a 19% stake while others include Blackrock with 13%, Goldman Sachs 4.7% and Calyon 4%.
Phorm had been hoping that its technology would be taken up by the UK's other major broadband players Virgin Media and TalkTalk.
