Shares in Psion Plc broke through the #10 barrier for the first time yesterday, having climbed from a 52-week low of just 265 pence. The company was probably undervalued then, but has the look of being slightly overvalued now. They were up 60 pence at #10.15 yesterday, having hit #10.35 early on as market makers pitched the price too high in very light trading. The price-to- earnings ratio, 14% a year ago, was 31.5% at yesterday’s price. The company is planning a two-for-one capitalization issue paid for out of reserves to bring the share price back to a more wieldy level. The reason for the excitement was the London-based palmtop computer and modem manufacturer turning in pre-tax profits for 1995 up 78% to #11.7m, on sales up 48% to #90.5m. Psion plans to focus on increasing its market share in the US this year, where it still makes losses, and entering east Asia in 1997, where it currently has no presence. The main drivers of the growth were the flagship Seies 3a palmtops and Psion Dacom Plc’s modem products. Dacom was the main victim of semiconductor supply problems the group experienced in the first half. These have been resolved to enable turnover at Dacom to double to #14.9m. The Series 3 range and peripherals sales were up 48% to #57.8m, with demand in the retail and distribution markets remaining strong with the corporate and professional markets gaining ground, especially in the finance, banking and insurance sectors, following the release of the larger memory models in the first half. The HC hand held terminals showed only a modest increase in sales, up 7% to #7.6m. The Organizer II Range, now 10 years old, continues to hang on by its fingertips, and turned over #4.4m in the year, selling exclusively to the industrial market. Its successor, Workabout, launched in April. The rugged handheld computer range reported sales of #2.8m in the period since April. There was a large increase in research and development investment during the year, with a 71% headcount increase and a 106% rise in expenditure to #5.6m, or 6.2% of turnover, to maintain the company’s lead in the handheld and PC Card modem arenas. Finance director Michael Langley said the expenditure as a percentage of sales would increase this year. The final dividend of 3.5 pence makes 5.0 pence for the year, a 43% rise on 1994. Psion has only ever made one acquisition, that of Dacom, and does not look like starting to snap things up now for the hell of it, despite its share price and cash balances up 191% to #10.2m, with no gearing.
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