Psion Plc, the UK palmtop computer maker, has seen its interim results hammered by its bungled launch of the new Psion Series 5, together with a body blow from the strength of Sterling against the Deutschmark. Net profits for the six months to June 30 were down 35.9% at 2.7m pounds on revenue that rose 19.8% to 64.4m pounds as Sterling’s appreciation bit into gross profit margins, and sales of the now redundant Series 3 machine took a nose dive. The information should have come as no surprise to the markets, following earlier warnings from the London-based company about poor sales, but the shares opened 35 pence down at 292 pence, only to recover to 337.5 pence later in the day. The launch of Psion’s new 32 bit palmtop computer, running the company’s own EPOC/32 operating system, may have been a critically acclaimed success but it has also been a severe manufacturing blunder. The EPOC/32 platform has been in development for five years, but once news of the new product’s imminent arrival reached retailers in the Spring, high street stores immediately started de-stocking the older product lines and Psion was unable to fill the gap with its new Series 5 units due to manufacturing supply problems. Were there difficulties in manufacturing the ultra compact, high technology, internal components? Absolutely not. Chairman David Potter has blamed the problems on supplies of some rather low tech bits of plastic. The company has now sourced the parts from a different factory, but production has only reached 25,000 units per month, and customers are climbing up the walls waiting for delivery. Meanwhile, rival machines from Hewlett-Packard Co and LG Electronics Inc (running Microsoft’s Windows CE operating system) are selling fast to former Psion die-hards now tired of waiting. Full production levels of 40,000 units per month will not be reached until the fourth quarter this year, too late to rescue the second half’s figures, and Psion have warned that the full year’s profits will fall short of 1996 levels. The board has declared an interim dividend of 0.7 pence per share, an increase of 8%.
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