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CHIRPY STC STRESSES STRENGTHS OF NORTHERN TELECOM DEAL AS ICL TALKS UNIX

STC Plc has announced a record set of results for 1987 with pre-tax profits taking a hike of 40% and turnover hitting the two billion mark. This announcement was accompanied by bullish statements about the company’s prospects in the Unix and telecommunications markets and a marked boost in confidence now that STC has the acquisition of Canadian giant Northern Telecom’s UK business firmly under its belt. Pre-tax profit for the year to December 31 was 40% ahead at UKP188m, but turnover was up just 7% at UKP2066.6m. Chief executive Arthur Walsh said that he expected this growth to continue in 1988 and further claimed: the group has made good progress in establishing its role into the next decade. Any convergence of ICL’s business with that of its parent will have to wait for the current priority, which is to integrate STC’s telecommunications interests with those of Northern Telecom, and Walsh named three key areas where STC will be using this partnership to break into the US market: fibre access systems (STC has picked up a lot of UK business from British Telecom’s drive to cable the City); intelligent networking; and integrated services digital networking products. Walsh commented that Northern Telecom’s support would mean enhanced research and development backing and more attractive opportunities in the future. But once again ICL appears to have been left out of any convergence. The overlap of Northern Telecom’s Vienna business systems with ICL’s DRS 300 and low-end Clan range will continue for the next two years at least, and each company’s lines will be marketed separately. STC said it would then initiate work on integrating aspects of the two product lines. ICL talks with Philips Despite these apparent signs of neglect preliminary results for ICL were solid with turnover taking an 11% upturn on last year’s figures at UKP1,299m. Overseas business however continues to flag – foreign turnover increased by a tiny 2% – currency fluctuations were blamed – which implies that it did just UKP440m, 33.8% of the total – overseas: less than a decade ago, ICL was doing a little under 50% of its business abroad, and no major computer company can afford to do much over half its business in its home market without going into decline. Despite City fears, there was no immediate sign of any nasties on the ICL profits front operating profit climbed 23% to UKP109.9m, and margins improved to 8.5%. ICL said that its business in non-performing countries, namely West Germany (CI No 873), and Scandanavia is being rationalised. Despite a general slowdown in the rate of growth in the computer market ICL reported a 30% increase in its VME customer base and expects further penetration in the UK health and local government markets, although it admits that demand in the retail sector could slacken. ICL managing director Peter Bonfield pinned hopes of company growth mainly on its family of Unix products: A major thrust into Europe will be on the back of the Unix operating system for vertical industry niches he said, and confirmed that informal discussions were taking place with Philips, although no details of what is afoot were given. Sales in STC’s defence division fell, but the company is to concentrate its efforts on communications within this sector and looks for this strategy to improve profitability this year.

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