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June 9, 1987


By CBR Staff Writer

Amstrad Plc’s share price looks likely to tumble over the next few days as City concern increases about the true level of sales of the PC1512. Broker Phillips and Drew sent its clients a sell circular last night and others are expected to follow shortly amid mounting evidence that sales are lagging well behind the company’s stated output of 70,000 machines a month. At the PC1512’s launch last September, Amstrad chairman Alan Sugar said that the company would produce 70,000 units a month until Christmas, and 100,000 thereafter. In the event, production at the South Korean factory never increased beyond 70,000 and manufacture of the 1512 is now believed to have ceased altogether. Phillips & Drew analyst Dennis Exton says that what was a 12 month product is turning out to be a six to nine month product. And, he is distinctly uneasy about Amstrad’s launch of the enhanced PC1640 at Comdex/Spring last week. Exton believes that Amstrad is focussing more on the US because of difficulties in Europe. Despite the fact that Sugar claims he has something else for Europe, Exton predicts that the 1640 will debut here as early as the PC User Show at the end of June, noting reports that Amstrad has booked advertising space around that time. Support for the belief that sales have slowed comes from recent figures from market researchers Keith Wharton Associates and Romtec which, while giving Amstrad an increasing share, indicate that the UK micro market has dramatically tailed off over the last few months. Recent government figures also indicate that sales of electrical goods, including computers, videos and TVs, all of which Amstrad produces, are lagging behind the rest of the economy. Last month, Amdtrad announced a special summer offer, a bundled package including a twin floppy 1512, printer and software for UKP150 less than the sum of the bits and Dixons, its biggest UK outlet, which like Tandy UK has been offering the PCW8256 word processor at UKP20 off, is believed to be ready to cut prices by up to UKP50 for the single floppy entry model. With Wildings now thought to be selling 300 to 400 1512s a month against its target of around double that, and Micro Business Systems boss Stafford Taylor telling journalists recently that he was glad not to be sitting on lots of Amstrad stock, there is no shortage of evidence to back the Phillips and Drew case. But, Alan Sugar delights in making the pundits look silly and they may well be proved wrong again.

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