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November 29, 1987

POPULAR CAPITALISM RUNS RIOT AT BULLISH AMSTRAD ANNUAL MEETING

By CBR Staff Writer

Alan Sugar may be at daggers drawn with much of the City, but Amstrad Plc has an army of small shareholders for who the East End’s favourite son can do no wrong – and a vocal collection of his fans turned out for the company’s annual meeting last week. Star of the meeting, apart from the irrepressible Sugar himself, was one of many of the small shareholders who come from the same part of London as Sugar himself, and have followed the rise and rise of the erstwhile barrow boy with enthusiasm. From Hackney, dressed in a blood-red gown, she had decided that Sugar was a man to follow in 1985, and had made her first investment in shares by buying a parcel of Amstrad. Her husband, who works with computers, was discouraging, assuring her that she was wasting her money. But watching her Amstrad shares climb soon gave her the investing bug, and she moved into the more advanced end of the market, buying options on Amstrad when those became available, and was soon so hooked that she took her Stock Exchange exams, and now works for a small broker. Why, Sugar was asked, does Amstrad pay such a small dividend? The rumbles of approval could be felt as he replied to the effect that a high yield would attract just the kind of institution that starts to panic if it reads a negative piece on the company in the Mail on Sunday. The handful of brokers’ analysts sunk lower into their seats and wished they could make themselves invisible as the swell popular capitalism in action was made mainifest. What of the business? Surely the fact that Dixons is warning that October and November were behind plan and that it was now too late to save the Christmas quarter must be bad news for Amstrad? Not at all: it’s Dixons’ problem, not Amstrad’s unless the store chain is stuffed to the gunwales with unsold Amstrad computers come January and has to start discounting heavily. But even if it does, the UK is now only 40% of Amstrad’s business, and high hopes are going into a new German subsidiary where Amstrad will take its fate into its own hands after its contract with Schneider runs out. And Amstrad is anyway seeing no evidence of the Dixons effect in the UK: the company has had a record run-up in the period to Christmas, and Sugar is beginning to think that his year of consolidation gave the wrong impression – there will be profits growth this year. And, coming soon, are higher ticket computer models, and new kinds of office equipment.

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