British publisher Dorling Kindersley (DK) has seen its profits plunge after spectacularly over-estimating demand for Star Wars books.

The company, whose shares almost halved in early trade, said it expected to make a £25m loss in the last six months of 1999.

DK said it had sold just three million of the thirteen million Star Wars books it had printed.

It announced that chief executive James Middlehurst had left the company and that it was reviewing its strategic options with advisers.

Peter Kindersley, founder and executive chairman, would assume responsibility for the group until a new chief executive is found, the company said.

The company, famed for its children's pop-up and educational books and CD-ROMs, said the principal reasons for the losses were seriously "misjudged over-investment" in Star Wars books and promotional expenditure for the pre-Christmas period.

Star Wars videos

The expected loss includes a £14m provision for all outstanding Star Wars stock and £5m on other stock and work in progress.

DK said it was in discussions with bankers as it seeks to overcome its difficulties.

"Although the company's core business remains strong, overall performance has been impacted by a number of specific issues," said Mr Kindersley in a statement.

"The board is resolving these issues quickly through rapid and effective management action at a time of significant change in the market place it operates," he said.

Mr Kindersley said he hoped the company would be able to strike back with the help of forthcoming releases of Star Wars videos.

"We are looking at the Phantom Menace video release in April and the Star Wars classic videos in autumn as good opportunities to sell books," he said.

The shares, which closed at 513p on Friday, plunged 46% to 277.5p before regaining lost ground to 357.5p in the late morning.