Psion holds back on dividends as share price plummets 11 per cent

Shares in Psion plunged a further 11 per cent yesterday as the loss-making electronics group failed to pay a dividend for the first time in 13 years as a public company and struggled to allay market fears over its future. Its shares closed 7.75p lower at 61.25p compared with 1,454p early last year.

Psion announced in July that it would pull out of the handheld computer market as a result of fierce competition from rivals such as Palm and Handspring.

The business is now concentrating on corporate products such as its Teklogix division, which produces handheld devices and software for businesses, as well as the Symbian mobile software joint venture in which it has a 28 per cent stake.

Psion said Symbian would require fresh funds early next year though the group did not give a guarantee that it would take part in the fund raising. "Subject to the determination of the board at the time, Psion has the resources to participate in such a funding round," the company said.

However, this was disputed by analysts who pointed out that Psion only has net cash of £18m and is currently making operating losses.

Psion yesterday reported losses of £54.4m for the six months to June. This included a £41m exceptional charge to cover the withdrawal from the consumer computer market, which will result in 350 jobs cuts.

Operating losses were £6.4m compared with a £4.1m profit in the same period last year. The main problems was Psion Digital, the consumer computer division that is being scaled down. It reported trading losses of £8m on halved sales of £77m.

Sales in Teklogix grew by 15 per cent in the first half. Psion said Teklogix revenues had held up well in the face of the US economic downturn. However, the group said it "remains exposed to the risk of further contraction in capital spending, particularly as its business activity worldwide is weighted to the second half of the year". Psion said Teklogix should generate cash and profits in the second half.