Deputy City Editor
Shares in Tadpole Technology, the former wonder stock of the computer sector, plunged 49p to 85p yesterday as they came back from a two-day suspension and the company announced a larger-than-expected interim loss.
Geoff Burr, the head of Tadpole's US operation, which accounts for 70 per cent of group sales, has left the company with a £100,000 pay-off. He leaves carrying the can for a dramatic collapse in fortunes that has wiped 80 per cent from the company's value in six months.
It emerged yesterday that the Stock Exchange is investigating possible insider trading in Tadpole's shares, which started falling heavily at the beginning of last week. Despite a request from the company to do so, the exchange refused to suspend dealings in the shares until last Thursday afternoon.
George Grey, Tadpole's 33-year-old chief executive, said: "The result for the first half of the year is unacceptable and hard lessons have been learnt."
The company admitted it was aware of a shortfall in sales of its latest notebook computer, the P1000, at the end of March, less than two weeks after Tadpole had tapped the market for £2m at 201p, more than twice the current share price.
That fund-raising was the latest in a string of placings and open offers since Tadpole came to the market in December 1992 at 65p, before soaring to more than 300p in a matter of weeks.
Mr Grey admitted that the company had sold less than half the budgeted number of P1000 computers since the model's delayed launch at the end of February. Tadpole decided not to make an announcement after March's disappointment, but April's sales were also poorer than it had hoped to achieve.
In anticipation of higher sales, the company built up its sales force and other overheads. The shortfall in revenues blew a hole in forecasts, which as recently as January were for profits of £10m this year.
House broker Albert E Sharp reduced that to £2m at the beginning of the year after Tadpole warned that shipment delays would lead to a first-half loss of £2.5m against expectations of a £1.8m deficit.
In fact, Tadpole lost £5.9m in the first half to March, including a £2m exceptional item to cover redundancies and stock writedowns. Mr Grey said he expected no more than break-even in the second half.
Tadpole designs and manufactures very powerful laptop computers using Intel's latest Pentium processor chips.
Despite the latest setbacks, the company's customary optimism was evident again yesterday with the promise that new orders with new customers would be announced within weeks.
About 70 per cent of Tadpole's shares are held by investing institutions and other large corporate holders, including IBM. There are, however, about 3,000 small shareholders, many of whom jumped aboard after the shares fell from their peak of 423p at the end of last year.
Investors with burnt fingers include the company's directors, who put £70,000 into Tadpole's shares in January at 165p in protest at the market's perceived over-reaction.
Investment Column, page 26Reuse content