Investors warm to Amstrad despite half-year loss
Friday 09 February 1996
Investors yesterday warmed to the latest trading news from Amstrad, and analysts predicted that the company's troubles in recent years would soon be left behind.
The upbeat projections by analysts of taxable profits of pounds 12m for the current year and up to pounds 26m for 1996/97 were made despite the group announcing a pounds 5m loss for the six months to last December. Amstrad made a tiny pounds 25,000 profit in the corresponding period last year.
Amstrad's shares, which were recently sent reeling by the abrupt departure of chief executive David Rogers, climbed 18p to 201p. The company has yet to find a replacement for Mr Rogers, leaving Alan Sugar, the company's chairman and founder, in full charge of the group's direction. Tony Dean, finance director, said the interim figures, which included a pounds 4m reorganisation charge, were "disappointing" but he was confident about the second-half.
Amstrad is still experiencing problems in its traditional consumer electronics products, including television and video recorders.
Analysts said the company's confidence was clearly underlined by a decision to hike the interim dividend by 25 per cent to 1.25p.
They said that losses from consumer electronics were probably as high as pounds 10m in the first half and believe that Amstrad's future performance hinges on Dancall, its maker of mobile phones for Orange and Mercury One- 2-One, and on Viglen, the direct seller of personal computers.
Mr Sugar said production problems at Dancall, bought for pounds 7m two years ago - had been resolved, and "production has now moved to full-scale levels."
One analyst said Dancall could well achieve pounds 150m of sales next year - more than half the pounds 271m that the whole group achieved in the year to last June.
Viglen - which was used as the platform to pull out of selling computers through high street shops - is also trading profitably. Viglen concentrates on selling to corporate clients, while small offices and private buyers are handled through Amstrad Direct.
Betacom, maker of traditional phones, is making "moderate" profits in a tough competitive conditions. Plans to expand into European markets are being considered.
Investment Column, page 18
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