Network encryption hardware vendor Senetas (ASX:SEN) has forecast a breakeven or a net loss in 1H11 as a result of poor trading conditions.
The company gave guidance in the range of a pre-tax loss of $1.5 million to breakeven for the half-year period.
A number of Senetas' major sales opportunities are with government agencies which are undertaking significant expenditure reviews, leading to project delays and downsizing, the company said.
Governments are under increasing pressure to cut expenditure as a result of the continuing effects of the global recession.
But the company said the outlook for 2011 remains relatively strong due to signs of recovery in several regions worldwide.
Once spending picks up, Senetas anticipates renewed emphasis on cyber security issues from governments worldwide.
Senetas reported an 8% decrease in pre-tax profit to $1 million in FY10. Net of tax, profit fell 16.9% to $948,000.
SEN shares fell 3.33% to $0.029 during Thursday's trading following the announcement.