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  1. Technology
July 25, 1988


By CBR Staff Writer

STC Plc chief executive Arthur Walsh yesterday admitted that turnover in ICL mainframes had been pretty stagnant in the first six months of fiscal 1988. Though margins had improved particularly on the Series 39 systems which are approaching maturity – the growth rate did not approach that of a year ago. Turnover for the division was up just 3% at UKP647.0m and operating profit rose 10% to UKP58.4m. The strongest rate of growth was in non-mainframe businesses such as office systems, industrial systems, software and services. Progress was also made in the retail market, particularly among French hypermarkets including Leclerc, Casino, and Mammoth, and since February ICL has had the largest hypermarket scanning opration in the US at Carrefour’s new hypermarket in Philadelphia. Though the increase in turnover is slight STC was at pains to point out that ICL’s turnover has risen by one third since 1985 and operating profit has more than doubled since then. Mr Walsh nailed ICL’s flag firmly to the new Community Charge or Poll Tax which he estimated will create a UKP200m market for new computer systems over two and a half years. He said that ICL is well ahead in developing Poll Tax applications and was optimistic that ICL would secure a substantial proportion the new market. The strongest feature of STC’s mid-term results was the growth in communication systems; turnover grew by 43% to UKP285.0m and operating profit rose 62% to UKP36.0m representing 34% of total profit. Most of the growth has been in submarine systems where new orders are expected to support business levels up to the end of next year. STC highlighted its newly announced plans to invest $35m in a cable manufacturing plant in Portland, Oregon, which it says will address the growing market in the Pacific basin (CI No 971). The division is also involved in negotiations for a cable from Bermuda to the Caribbean worth about $80m. There was strong order growth reported in other sectors of the telecommunications business, with the selection by British Telecom as a supplier for the nationwide extension of the optical fibre based Flexible Access System being the most note-worthy. Arthur Walsh said long-term 24% shareholder Northern Telecom Ltd’s UK telecommunications activities and European Data businesses have been assimilated and that both will be producing profits by the end of the year. Group turnover in the half was over UKP1,000m for the first time, an increase of 13% on 1987, with operating profits up 23% at UKP97.3m. Turnover in the Components and Distribution division rose 25% to UKP174.0m mainly due to growth in the electronics distribution and electrical distributors business. Looking to the future Mr Walsh said the strategy of concentrating on opto-electronic systems was bearing fruit. He expects developments in flexible access systems and synchronous optical transmission based on the Sonet standard to create new markets for a vast number of new applications in the 1990s.

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