Psion teams up with Motorola

PSION, the British hand-held computer manufacturer, yesterday disclosed separate strategic alliances with Motorola, the giant American electronics group, and Acorn, the British educational computer specialist.

But the news failed to distract the City from disappointing pre- tax profits of pounds 1.05m in the six months to 30 June, compared with pounds 270,000 a year earlier. The shares, which surged earlier this year to a high of 209p on expectations about the company's award- winning Series 3 product range, lost a further 5p to close at 99p.

Turnover rose 43 per cent to pounds 16.5m, primarily on the back of Series 3 sales which now account for up to half of Psion's turnover, but the company acknowledged that the recession was taking its toll on corporate capital expenditure and profits were being trimmed as a result.

Sales to British corporations - usually the high-margin end of its business - proved especially weak. The company admitted its return on sales of 6.5 per cent was below its target of 10-12 per cent.

Gearing at 37 per cent is higher than the directors would like, but with the peak summer season out of the way, they expected a substantial cut in borrowings by the year-end.

The agreement with Motorola means that Psion computers will form the core of a hand-held terminal that will enable mobile workers to keep in touch via radio.

The Acorn deal - an original equipment manufacture agreement - is for Psion to supply its specially adapted palmtop computers for use in the education market. The device will be marketed from October as the Acorn Pocket Book.

Dr David Potter, Psion's chairman, said profits were lower than he had hoped to achieve a few months ago. 'We can see our return on sales improving over the next 18 months'. Psion is maintaining the interim dividend at 1p.