Psion profits jump by 38%

David Potter was back at the helm at Psion yesterday, presenting a 38 per cent jump in pre-tax profits from the hand-held computer maker only three months after a heart operation threatened to end the chairman's entrepreneurial career.

Despite another set of solid figures, and the return to health of the company's founder and driving force, Psion's shares, which have risen more than twentyfold in the past four years, tumbled 24p to 408.5p after the company disappointed dealers by refusing to name the large electronics companies it says it is lining up to licence its unique operating system.

The decision to licence out its software was taken last year after Psion realised it was too small in the context of the global information technology market to go it alone. Although the company plans to remain a manufacturer of computer hardware, Mr Potter admitted that licensing royalties would become a significant contributor to group profits within a couple of years.

The fall in the share price was also driven by worries over the effect of the strong pound on profits this year and by concerns about the impact of Microsoft Windows CE, a version of Windows 95 which the US software giant has developed for handheld computers.

Mr Potter dismissed the threat from Microsoft, saying that reviews of the rival operating system had been poor in America. He said he was confident that Windows CE would expand the market for handheld computers and added that he was satisfied that Psion's technology was sufficiently advanced for the company to benefit from that larger market.

Looking ahead, Mr Potter said Psion planned to launch two products this year using a new 32-bit technology that it had developed out of the less powerful 16-bit technology that drives its Series 3 and Siena palmtop computers. The new generation of products is likely to include smartphones and other devices that merge computing and telecommunications disciplines.

Investment column, page 17