Losses prompt big changes at Acorn

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ACORN Computers blamed changing purchasing patterns and high development costs for a plunge into the red in the six months to July, writes James Bethell.

Shares in the company yesterday fell 4p to 94p after it announced an operating loss of pounds 2.2m on turnover of pounds 23.7m, compared with a profit of pounds 300,000 in 1993 from similar sales.

The computers-for-schools business was hit by the devolution of budgeting control to schools, which meant many procurement decisions were delayed to the second half of the year. The April launch of the new Risc PC computer resulted in a supply log-jam.

Investment in a new multi- media business, Online Media, which will not generate revenues until 1996, resulted in pounds 400,000 of losses.

Borrowing increased from pounds 2.3m in 1993 to pounds 9.5m in 1994 as sales slipped in the first half and stocks piled up.

The company, which is 78 per cent owned by Olivetti, has run into trouble this year. Six months ago the fall in profits, down from pounds 1.58m to pounds 104,000, was blamed on higher component costs and increased competition.

Sam Wauchope, chief executive, said Acorn had instituted far-reaching reforms that he hoped would take the company back to profit in the second half of 1995.

'The board is conscious of the importance of broadening Acorn's market presence, both within the UK and overseas, and Acorn's sales and marketing activities and organisation have recently been restructured to address this challenge,' Mr Wauchope said.

A marketing initiative with Tesco would boost sales, margins would improve as overheads were slashed, and interest charges would fall as working capital was reduced.