Videologic optimistic after write-down

Videologic, the PC components and software company, weathered a pounds 1.75m stock write-down in the second half to post reduced losses for the year of pounds 7.8m, on turnover up marginally to pounds 13.6m.

Geoff Shingles, the newly appointment chairman, said the company should see further improvements in 1996, particularly by the last quarter, when revenues from royalties paid on its PowerVR silicon chip will begin to flow through.

Videologic has development joint ventures with NEC, the Japanese computer manufacturer, to supply the company's 3D technology, led by the PowerVR family of silicon chips. It has also developed a chip for multimedia applications in PCs and interactive set-top boxes, aimed at replacing graphics controllers and other multimedia devices.

The company, which was floated 18 months ago at 50p, raised pounds 4.8m in March 1996 through a placement of 7 million new shares. It is gaining a following in the City because of its presence in two growing markets - the Internet and home entertainment.

"Certainly the growing interest in the Internet will be helpful to us," Mr Shingles said.

Compaq, a leading PC manufacturer, announced in May it would incorporate the PowerVR chip in its Presario computers starting this summer, helping send Videologic's shares sharply higher. They closed down 3.5p last night at 108p.

Videologic said yesterday it had taken steps to ensure that the expensive stock write-down will be the last of its kind. "We had an acute shortage of memory components last year, as everyone scrambled to buy product," Mr Shingles said. "In the end, there was overcapacity in the market, and prices dropped by 50 per cent in a single month, leaving us with overvalued inventory."

Mr Shingles said the situation had been "unacceptable" and that the company has moved to reduce stock and build on firm orders.

The PowerVR is also expected to be introduced into arcade games and in at-home entertainment systems, probably in time for the busy Christmas sales period.