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Psion signs deal with Dell to supply modem cards

Psion, the hand-held computer company, has signed an agreement to supply US giant Dell Computer with the next generation of hi-tech computer modem cards world-wide.

Responding to questions about trading ahead of the crucial Christmas period, the company said that sales of its new range of Series 5 hand- held computers were "very strong".

Psion Dacom, a wholly owned subsidiary of Psion, will supply Dell, the world's largest direct seller of personal computers, with 56K, high-speed PC cards. Psion believes the deal will add between pounds 15m and pounds 20m to Dacom's revenues, which themselves are around a fifth of the group's total sales.

However, it admitted that with price competition on PC cards "cut-throat", particularly in the direct sales market, margins on the agreement are unlikely to be very large. However, the deal will boost Psion's presence in the US, where it has struggled to establish itself and where Dell is establishing a growing presence. The two companies already have supply agreements in Europe. Psion's shares rose 17.5p to 451p.

Psion says its 56K cards, which are the size of a credit card and replace desktop modems, are the fastest modems that can be used along normal telephone lines. The cards are reprogrammable and can be upgraded to use with digital GSM mobile-phone systems and ISDN lines.

In contrast to several retailers like Comet, which have found pre-Christmas sales sluggish, Psion said it was confident about sales of the Series 5.