Shares in Psion Plc, the UK’s innovative palmtop computer maker, have taken a hammering again as year end profits fell foul of the strong pound, but the main culprit was chairman David Potter who said he was cautious about the firm’s short term outlook. Consequently, the shares plunged 20% on Wednesday, falling to 333 pence as the London-based firm revealed net profits for the year to December 31 down 25.5% at 7.7m pounds on revenue that rose 14.4% to 142.0m pounds. Sterling’s strength reduced revenues by 12m pounds and profits by 6m pounds, sharply depressing earnings per share by 29% to 10.3 pence. The figures were roughly in line with the city’s expectations and the adverse reaction seems to have stemmed from Potter’s remarks about caution, allied with a general paranoia about the entry into the palmtop world of Microsoft Corp with its Windows CE operating system, now a competitor of Psion’s own EPOCH 32. It was a similar story at the half year stage in September, when the shares dived 10% on a big profit fall, only to recover again some weeks later. Psion encountered manufacturing problems during the 1997 launch of its hugely popular Series 5 palmtop computer, which caused a severe high street shortage, and left customers waiting for weeks. The company is now meeting demand for the critically acclaimed device, with production running at around 30,000 units per month, it said, but this hiccup was partly to blame for the poor figures. The group derives around 60% of revenues from its range of palmtops, with the remainder coming from PC Card modems, industrial terminals and software licensing. It’s also currently working on the next generation of palmtop which will incorporate a mobile phone (combined with the already available Psion browser) to facilitate truly mobile web surfing, although Psion refuses to confirm this directly. As for Microsoft and Windows CE, Psion says it has no intention of trying to compete head on with Bill Gates. Rather, it sees CE becoming too bloated for true palmtop applications, eventually inhabiting a new category of device it calls a sub-notebook. The company remained cash generative in the year and the total dividend rose 11.1% to 2.5 pence.
