City unimpressed by Amstrad email phone

Amstrad's new phone designed to bring email to the mass market has had the thumbs down from investors.

Since the launch of the company's e-m@ailer speaker phone, answering machine and email device yesterday, the company's share price has dropped from £5.06 to £3.97, down £1.09. Amstrad is targeting its £79.99 device at people without internet access who want to send and receive email from home.

"Amstrad is bringing mass technology to the mass market of people who don't understand computers, don't know how to use them and don't want to spend £1000 on one," said the company's chairman Sir Alan Sugar.

Amstrad has joined forces with BT on the device. BT already has a similar product on the market - dubbed the Easicom - which it maintains is geared towards the more sophisticated user.

Beeson Gregory, Amstrad's house broker, admits that Amstrad's share price has risen over the last few weeks on the anticipation of an innovative new product from the electronics giant.

"It is frankly difficult to tell how well the product will do - it needs to be in critical mass before you can say whether it's successful or not," John Gregory, director of Beeson Gregory, said to vnunet.

"It is a case of a sprat to catch a mackerel. Unlike most Amstrad blockbuster products which sell on 30 per cent to 40 per cent profit, this one is being subsidised and will suffer a loss to get a nice flow of revenue down the line," he said.

Amstrad plans to make a profit from usage charges - such as 12p to download an email - and on-screen advertising. The device is heavily subsidised as it costs around £120 to produce and was 18 months in development with BT.

Beeson Gregory has shaved this year's pre-tax profit forecasts for Amstrad by £1m to £13.3m, and slashed next year's by £8m to £6.2m.