Acorn Group Plc, which saw its revenues collapse in the first half of this year and following a top level boardroom reshuffle back in June, is now seeking ways to return to its shareholders the only substantial asset remaining, a 26% stake in recently floated ARM Holdings Plc worth around 130m pounds. The Cambridge, UK-based technology design and consultancy firm revealed on Friday that its operating losses for the six months to June 30 were 5.6m pounds compared to losses of just 1.0m pounds last time. Revenues fell 63% to just 5.3m pounds as both product and consultancy revenues disappeared. Sales of Acorn’s RISC-based PCs and other ‘traditional’ products fell by two-thirds in the half while the consultancy business provided by Oracle Corp dried up completely after Oracle bought out the remainder of its Navio Inc joint venture and took its network computing initiatives in a different direction. And although Acorn made a one-off profit of 14m pounds from the sale of shares in ARM during the half, the non-ARM related businesses have not reported a profit since 1993. Despite this depressing fact, Acorn insists it still has prospects to create successful businesses in two markets; components for the digital interactive TV market and thin client computer designs. Activities outside of these areas will be sold or shut down, the company said. And because investors still perceive Acorn’s entire value to be its holding in ARM, this too will be returned to Acorn’s shareholders for them to hold directly, allowing the non-ARM businesses to continue outside of public ownership, either as management buy-outs or sold to third parties. The problem with this strategy, however, is the significant appreciation in value of Acorn’s holding in ARM following the latter’s flotation. If the shares are simply distributed, a tax bill of around 40m pounds will arise. The company said it is pursuing ways around the problem but said that it could not yet comment on how this would be achieved.
