Psion's shares plummet after profits warning

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The Independent Online

The handheld computer maker Psion is facing half-year losses part-way through an 18-month turnaround drive. The news sent its shares down more than 17 per cent yesterday.

The former darling of the stock market and poster child of British technological innovation blamed supply chain issues and the weak pound for losses of £4m expected in interim figures to be published next month.

The company, which took the world by storm with the first-ever handheld device, the Psion Organiser, in the 1980s and now makes rugged PDAs for commercial and industrial use, said that despite a 16 per cent rise in hardware orders, revenues were set to drop by 4 per cent compared with the first half of 2010.

The dip will drag down the group's full-year performance, and revenue growth is now forecast to be between 5 per cent and 8 per cent, rather than the 10 per cent initially outlined. But the supply chain issues have been rectified, and improved performance in the second half will make up some of the lost ground, the company said.

And two new products – the EP10 low-cost, rugged PDA, and CDMA roaming technology for the US market – are already selling well, with initial bookings for the EP10 at about 9,000 units.

Psion's management stressed the potential of the US market yesterday. "The EP10 and CDMA have placed Psion for the first time in the largest and fastest-growing segment of the rugged handheld marketplace," Psion said. "These now support our growth but they are also material in our strategy of building revenues in the US which is the largest potential geographic market."

Psion's profits warning comes at a particularly difficult time for the company. It only scraped back into the black last year, after the global recession left it with two years of losses. Full-year results in March were healthy, showing operating profits of £5.7m (compared with losses of £3.1m in 2010) and a 5 per cent rise in the dividend. But the stock has had a volatile year, climbing as high as 102.5p in April before slumping to 74.25p last night.

It is now 10 years since Psion – set up by the British tech wizard David Potter in 1980 – pulled out of the consumer handheld computing market it helped to create. Despite early successes that saw the company named by Bill Gates as the biggest competitive threat to Microsoft, Psion's dominance of the nascent handheld market was tested to destruction by the collapse of the dotcom boom and sharp competition from US rival Palm.

In the aftermath of the crash, Psion started shifting away from the handheld market, focusing instead on its Symbian operating system – which became the leading software platform for the first generation of smartphones – and also on "rugged" hardware for commercial operations, such as delivery companies. Mr Potter retired from the company in 2009.