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March 22, 1996


By CBR Staff Writer

Division Group Plc has finally named the day, or at least the year, when it expects to be in profit, in spite of reporting an increase in losses for 1995. The UK-based virtual reality hardware, software and systems company, which to date has fought shy of predicting when it would it would become profitable (CI No 2,598), has again turned in losses for the year, up to 3.9m British pounds from 1.4m pounds last time. Turnover also fell slightly, down 8.3% to 4.8m pounds, but the company has a series of explanations for this, and with a healthy start to 1996, says it expects to show a profit in 1997. One reason for the drop in sales last year was the company’s partnership agreement with Hewlett-Packard Co set up in mid-1994 (CI No 2,460), under which Division became a Hewlett-Packard reseller. Silicon Graphics Inc, for whom it was also a reseller, did not take too kindly to this the company said, and Division saw sales of Silicon Graphics hardware plunge 50% in 1995. However it says it re-built its relationship with Silicon Graphics, and in October, became a Premier Partner, putting it in the top 25 Silicon Graphics resellers worldwide. This, says marketing director Pierre duPont, has had a positive and immediate effect on sales in the first quarter 1996. A second reason for lower than expected sales of virtual reality systems was problems with the sales structure in the UK and US. The company says it increased its sales force in 1995, but it took much longer than anticipated for new salesmen to become productive. Thirdly, and importantly, Division slipped on the release date for a new version of its dVS and dVise virtual reality run-time and authoring software by six months. Version 3.0 was finally launched in July 1995 (CI No 2,698), but expected revenues for 1995 were down as a result of the delay. DuPont says the delay was partly due to the software being narrowed down. He says the company has moved more and more to focusing on interactive virtual prototyping for engineering markets, and the software has been narrowed but enhanced to meet these user requirements. In November 1995, Division began beta testing dVS and dVise for Windows NT, and says following sucessful initial tests, it is very optimistic about the future of this product. One possible cloud on the horion is its relationship with Hewlett-Packard in its PixelFusion division, which produces advanced three-dimensional graphics accelerators based on PixelFlow technology licensed from the University of North Carolina. The two companies have been developing a high performance graphics super-workstation, the PFX, but Division says Hewlett is not developing its machine fast enough, and more funding is needed. Division has threatened to pull out unless Hewlett invests more time or money in the project, and this is so far unresolved. The company says the first quarter of 1996 is its best so far, its current order book is 1.5m pounds and it has 3.7m pounds in the bank. It therefore anticipates good revenue growth in 1996, and profitability in 1997. In line with its stated policy, it does not pay dividends.


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