A vicious market bit 87 pence, or 17.4%, off Tadpole Technology Plc’s share price, which slumped to 412.5 pence, as the company’s interim figures failed to live up to expectations. Pre-tax losses for the year to September 30 were UKP1.3m, although turnover was up by 41.9% at UKP32.5m. Tadpole’s share price had been surging, it had been at 403 pence on November 7, as analysts became excited on the company’s venture into the high-end personal computer notebook, with the 100MHz Intel Corp Pentium-based P1000 (CI No 2,539). Unveiled at Comdex and a finalist in Comdex’s competition for best new mobile computer, the P1000 represents a move away from laptop Unix workstations, a niche that Tadpole has made its own with deals with Sun Microsystems Inc for the Sparcstation, IBM Corp for the RS6000 Model N40 and Digital Equipment Corp with its Alpha AXP chip. However, according to George Grey, chief executive, Tadpole does not intend to compete in the commodity market, and will be focusing on the very high end, where users need a machine twice as fast as the 75MHz Pentiums currently available, at the same price.
Magnesium cases
With the P1000, Tadpole believes that it has a six- to 12-month lead over competitors, particularly in Magnesium cases, cooling and electro-magnetic interference technologies. Much of this expertise has crossed over from Tadpole’s Unix laptop experience, which accounts for 79% of Tadpole’s business and was up 73% year on year, and the commonality of components will continue. The Cambridge-based company believes that there has been justifiable criticism of it having very clever products in a very niche market and has decided to diversify. In the year, Tadpole won a $20m contract over three years from the US Air Force through Lockheed Sanders for its Sparcbook 3 and its board assembly division won a $20m contract over four years for a major US IT company. Tadpole attributes the losses to gross margins falling by 10 percentage points to 28% arising from the change in product mix and a move to indirect sales through IBM; a 60% increase in investment in manufacturing, predominantly in the US; and development costs that were up 55%. Tadpole was also hit by the software delays for the Sparcbook 3, and this has led to a 14 week glut of stock. Sales of the Sparcbook 3 were high in September and Tadpole has 80 days of sales currently outstanding, which the company soon hopes to reduce to between 55 and 60 days. It expects 1995 to be cash-generative but this is very dependent on the P1000 ramp-up, which may require extra funding if ramping needs to be faster than expected. Tadpole is still looking to seek a Level II American Depositary Receipt listing on NASDAQ, subject to US regulatory approval, early in 1995. The company will pay no dividend.
