Shares in MicroEmissive Displays Group more than halved yesterday after the company said it now expects to achieve month-on-month profitability during the next financial year. It blamed a general slowdown in the demand for consumer electronics worldwide and a slower-than-expected development of the market for consumer head-mounted displays.

In March, Bill Miller, the company's chief executive, said MicroEmissive was "on track to profitability on a month-on-month basis toward the end of 2008", and that 2009 would be "fully profitable".

Yesterday's statement sent the company shares plunging on London's Alternative Investment Market. By the end of dealing the shares had lost 51.4% of their value - down 13p to 12.25p.

The Edinburgh-based designer and manufacturer of low-power microdisplays said, from a manufacturing perspective, its German plant in Dresden continues to perform well with manufacturing yields in line with forecasts.

MicroEmissive said discussions with potential customers remained "positive" and the company has shipped more than 100,000 units to three overseas manufacturers of headsets.

The firm also reported nine recent design wins with potential clients which plan to use its eyescreen device in their own products.

MicroEmissive said its director of sales and marketing, Paul van Eynde, left the company on May 12.

Miller will take responsibility for the sales and marketing function, and chief financial officer Graeme Walker will take responsibility for operations while a permanent replacement is sought.

Commenting on outlook, Miller said: "We are confident that the prospects for eyescreen remain very exciting indeed. The delay in the development of the market for consumer head-mounted displays has been disappointing but we are still confident that the goals for MicroEmissive Displays can be met, albeit slightly later than expected."

He added: "The design-in activity remains strong and feedback from customers is extremely positive, which gives us confidence in the future performance of the company."

Miller told The Herald he did not think the economic slowdown would do any long-term harm to the company.

"We are very pleased with the growth of the business. The order book is growing. We expect to continue to grow the business," he said.

Miller said there had been no cancellations of orders from customers. Asia is the company's biggest market.

MicroEmissive, a spin-out from Edinburgh and Napier Universities, hit the headlines in 2002 after building the world's smallest television. The company specialises in light-emitting polymer-based microdisplays that are a quarter of the size of a postage stamp.