Sugar stirs fears over Amstrad dividend

SHARES in Amstrad, the consumer electronics group headed by Alan Sugar, are expected to come under pressure today amid growing fears that it will pass this year's dividend, writes Neil Thapar.

The concern over its dividend follows remarks made by Mr Sugar to a weekend newspaper. Although he is reported to have declined a statement about the company's payout, he added: 'Dividends should be paid out of profits.'

With the company expected to report a massive loss for the year ended 30 June, his remarks are likely to unsettle Amstrad shares in trading today. They closed at 22p, down 2.5p on Friday, valuing the company at pounds 125m.

Last month the company warned that its full-year loss to 30 June would be pounds 25m worse than market expectations. The warning led to a sharp downgrading for City forecasts, and most brokers are looking for a pounds 65m taxable loss against a pounds 20m profit last year. Even this may prove optimistic, and there is speculation that the deficit could top pounds 75m.

Amstrad's problems stem from a collapse in demand for personal computers and a high street price war for hardware. Although the company has seen strong growth in satellite television receivers in the past two years, that is now maturing business.

However, the company has built up a pounds 100m cash pile by selling some of its computer stocks for little or no profit.