A gamble on the canny Mr Sugar: Comment
Thursday 09 February 1995
As Mr Sugar rightly points out, a £12m loss is small beer for a company the size of Thorn if it believed there was any prospect of improvement. Pulling the plug shows what a bleak place the high street has become.
When Stanley Kalms, chairman of Dixons, warned he would have to share the pain of non-existent trading profits with his suppliers, Alan Sugar blew a fuse as only he knows how. He realised the game was up, abandoned the middle-man and set about trying to reach the consumer directly through the acquisition of Viglen, and more recently through mail order with the the launch of Amstrad Business Direct.
The attraction of Amstrad is that with cash in the balance sheet worth 117p a share the potential gearing on the share price is enormous. Even in its slimmed down form, sales in the first half were £143m. A modest return on that sort of turnover would make dealers' expectations of a 200p share price look not unduly fanciful. None the less, Amstrad remains a gamble on the ability of its mercurial chairman to relearn his uncanny understanding of what the man on the Brentwood omnibus wants to buy. Unfortunately for the bulls, the answer to that might well be very little.
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