Bottom Line: Heading south

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IT IS hard to foresee when Amstrad will ever return to operating profit, especially when the company is so half-hearted about its core activity. The management's latest excuse for poor results is that everyday consumer electronics are in decline.

To tackle its fall from grace on the high street, now that its low- price competitive edge is thoroughly blunted, Amstrad is developing higher-value products and trying to build a more upmarket brand image.

It has also diversified, a little, into mobile phones. Amstrad hopes to reach a deal with one of the mobile telecommunications operators to provide cheap handsets in return for a share of call revenues. Sceptics say there is little chance of Amstrad winning a slice of total airtime revenues.

Without that, the mobile telecommunications acquisition looks like yet another consumer electronics commodity business. Amstrad's share of that basic market is declining.

With little sign of profits ahead the value of the business is shrinking, despite a comforting pounds 143m of net cash worth 25p a share.

The share price had recovered to 54.5p before last November's profit warning. After the latest alarm they are heading in the direction of the notorious 30p offered by Alan Sugar in his abortive bid to take the company private just over a year ago.