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August 1, 1988

INMOS IN SIGHT OF BIG PROFITS ON BACK OF SURGING SALES

By CBR Staff Writer

Inmos International Plc is in sight of substantial profits on the back of strong demand for its Transputer and Colour Look-Up Table from an enviable roster of blue-chip customers – and Thorn EMI Plc suddenly realises that it has a hot property on its hands. The developments, which have seen the Newport, Gwent chipmaker really start going gangbusters in the past couple of months, explains why negotiations to sell a large stake in the company have been so protracted: the stream of good news from the firm has enabled Thorn to gazump its would-be partners more than once, and the company is now believed to be holding out for a very fancy price. The expectation is still that it will sell three quarters of the business to the Big Three European chipmakers Siemens AG, Philips NV and SGS-Thomson Microelectronics SA – but even the percentage to be sold may have fallen by the time agreement is reached: if the potential profits that Thorn can look forward to become clearer, the company may want to retain more than 25%, and thus get closer to recouping the UKP250m it has spent on the company so far. The key lies in Inmos achieving sales in excess of $95m for the year to next March: anything on top of that would be near pure profit – and some City analysts are getting carried away to the extent of talking in terms of $150m for the year. Profits are currently believed to be running at $1m a month, that figure having been achieved in a bumper June – traditionally a doldrum month for the chip industry. As to customers, Eastman Kodak Co is expected to introduce an integrated facsimile machine and printer driven by Transputers in November, and Mitsubishi Electric, Matsushita Electric and Canon Inc all now have laser printers driven by the chip. As for the Colour Look-Up Table or CLUT, Compaq Computer is thought to be about to place a large order, and Amstrad Plc is thought to have already placed a big one – likely for use in the forthcoming MS DOS-based hobbyists’ computer, which can be expected to have exciting colour graphics and sound, and is expected to replace the PC1512 – no longer being manufactured – in the product line. Nixdorf Computer AG also plans to use Inmos chips and is now also a candidate for an equity stake in Thorn EMI’s ugly duckling.

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