Sugar's e-m@iler comes good for Amstrad

Amstrad, Sir Alan Sugar's technology group, said yesterday that profits would beat expectations this year thanks to solid sales of set-top boxes and its e-m@iler product.

The group said operating profits for the year to 30 June were expected to be "significantly" ahead of current market forecasts. Higher revenues from both Amserve, the e-m@iler business it controls, and its core consumer electronics operation, which makes set-top boxes, were behind the upbeat statement. The shares closed up 16p at 80.5p.

Evolution Beeson Gregory, the company's broker, is looking to double its pre-tax profit forecast for the current year to £2m and is also looking to raise its profit forecast by £1m to £7.5m for the year after.

"The consumer electronics business is supported by the Sky business and the e-m@iler continues to prove the sceptics wrong," Robin Hutchings, an analyst at Evolution Beeson Gregory, said.

Amstrad launched the e-m@iler - a telephone crossed with an e-mailing device - at the peak of the technology bubble in March 2000. But disappointing sales of the product - a telephone with a keypad and screen for internet use - forced it to halve the price of the gadget to £49.99 just after Christmas.

Yesterday's statement was further evidence that the price cut has paid off. In February, Amstrad said it had sold 41,000 of the e-m@iler phones since halving their price, bringing the total sold to just over 200,000 units.

It also said then that revenue per day from the e-m@iler user base was £13,000. Mr Hutchings reckons that could have risen to more like £15,000 a day.

Amstrad subsidises the cost of the machine, hoping to recoup the subsidy with a cut of the telephone charges, advertising and other services such as on-line games. The gadget is the core product of Amserve, which is 89.8 per cent owned by Amstrad and 10.2 per cent by the retailer Dixons. Its telecoms partner is Thus.

Amstrad's set-top box business is also trading strongly. Last month, the company unveiled plans to make more equipment for BSkyB.