Psion posted an expected sharp drop in half year profits on Thursday as a result of falling sales across its business and continuing start-up losses from its Symbian joint venture with cellphone manufacturers.
But the UK palmtop supplier was upbeat about growth prospects in the second half of the year and said it had a 72.7 million sterling warchest to acquire small companies and start-ups that made Internet and wireless Internet devices.
For the six months that ended 30 June, Psion saw revenues drop to 64.2 million sterling from 74.3 million sterling.
Psion Computer's palmtop sales fell 34 per cent to 24.5 million sterling as demand for Series 5 devices fell in anticipation of the introduction of the Series 5mx, which shipped in June.
Psion Enterprise Computing, formerly known as Psion Industrial, also saw sales down to 10.8 million sterling from 11.1 million in the year ago period, while Psion Dacom was hit by the market shift to embedded modems from PC card modems. Its revenues dropped to 102.3 million sterling from 113.4 million sterling.
Pretax profits were in line with expectations, however, at 57,000 sterling, after taking into account Symbian's losses of 2.8 million sterling, a 900,000 sterling charge due to the cost of outsourcing the firm's surface mount assembly business from its Greenford production facility, and a one off gain of 10.2 million sterling following Motorola and Matsushita's investments in Symbian.
Some 1.3 million sterling of this was recognised in Psion's profit and loss account and the remaining 8.9 million sterling in its balance sheet reserves.
But David Levin, the firm's chief executive, said: "We expect to use the group's strong balance sheet and cash resources to invest in emerging growth markets [for mobile Internet access systems] through partnership, acquisition and by organic growth. This period of investment - which includes Psion's ongoing investment in Symbian - will continue to constrain Psion's short term profitability."
Symbian is developing the Epoc operating system to run wireless information devices (see VNU Newswire, 13 July, 1998) and is expected to move into profit by the end of 2001.
Levin added: "However, the second half of 1999 is expected to be stronger with new products from Psion Computers and Psion Enterprise contributing to increased revenues."
Psion Enterprise started shipping its new netbook sub notebook computer in September and will expand the range with new offerings later this year, while Psion Computers launched its Series 5mx in June. Another palmtop device is also due to be released at the end of the third quarter.
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