PEOPLES ★ Machine sell off likely as profits plummet ★

Amstrad Faces Cash Crisis (New Computer Express)
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What you can expect for Amstrad's range of machines this Christmas

PC2000s: Price-cutting, but most probably disguised in the form of bundles, on the way

PC200: Disappeared since last Christmas's disastrous launch. Possibly coming out before long as an ‘MS-DOS PCW', a cheap word processing bundle with printer and software.

PC1512/1640: These low end PCs look due for a phase-out; watch for special deals

CPC: Selling well. Still a good machine. Expect no special deals or price cuts.

PCW: Still selling very well - recent ad campaign by Amstrad should add significantly to sales. Expect no price cuts or special deals.


Amstrad is in disarray after its latest figures show plunging profits, mushrooming overheads, a cash deficit -and huge stocks of unsold machines.

Computers worth £200 million are sitting in warehouses, most of them PC2000s - the high-end range whose sales still haven't taken off for the company. This is more than twice what Amstrad sold this year. If Amstrad is going to shift them margins must suffer - which means cheaper top-end PCs in the shops.

After problems with one of its main High Street retailers, Dixons, which took the Olivetti PC much to Amstrad's annoyance last year, Amstrad may be forced to go cap in hand to ask retailers to shift stock at cut prices.

But Amstrad's Nick Hewer dismissed the possibility of giveaway PC2000s. He told Express, “ People may try to beat us down on margins, but we shall try our best to sell the equipment at normal margins in the normal and orderly way. It's not a fire sale. There'll be no surprises.”


The slump in Amstrad's fortunes is shown dramatically by its share price, down to 47p from its high of 208p last year. Relative to the FT All-share index, it has plummeted from 900 to 200. The present undervaluing of the company, which puts its total market value at £267m with its assets at £31 lm, means that the company could be bought for less than it is worth, and Sugar is threatening to buy all the shares himself, in effect buying back the company, which was floated in 1980.

Sugar, clearly frustrated by the low share price despite the company's still considerable profits this year, said "I see no necessity for remaining in the firing line if we are not being thanked for it by any form of rating”, and threatened to repurchase the stock. But to do this, Sugar needs cash, and the cash to buy the company back must come from sales - which would mean severe margin cutting to shift the stockpile of PCs.

But the reluctance of investors to put their money in Amstrad is easy to see. The profits halved last year and are likely to halve again; the company's cash position has turned from positive to £100m of borrowing; and perhaps most importantly the company's main market, the UK, has seen the consumer spending.

Sugar has dramatic proposals to make the company more profitable again. First is the closure of Amstrad's audio division - the original business which started Alan Sugar off in the 1970s. Second would be a radical re-organisation of management.

The company's results to 30th June this year showed a profit of £76m on a turnover of £626m. But last year the same turnover produced a profit of £160m - and of the £77m it made this year, £75 was made in the first six months. In other words, profits this half were £2 million, on sales of £277m.

Alan Sugar's statement noted that expenses had increased “substantially as overseas sales and marketing activities have expanded, sometimes in advance of sales” - a reference to some of the advertising campaigns that produced few sales as the PC2000s had been delayed and were not available.

Pundits believe that things will worse for Amstrad before they get better.

  • During the Stock Market ups and down on last Monday Alan Sugar was £17 million down by lunchtime. After the upturn later in the day his fortune had recovered to a more manageable £2 million loss.


This has been a year of headaches for Amstrad's accountants:

  • Amstrad paid £44m for a stake in US semiconductor manufacturer Micron in an effort to safeguard DRAM supplies. The stake is now worth two-thirds of its original value - a notional loss to Amstrad of nearly £15m if it decided to sell
  • Advertising on PC2000s -which were not yet then available - wasted £10m
  • The PC2000 range was Amstrad's push into the lucrative top end business market. Problems with the hard disk controllers on the 2286s caused by a faulty component were put right by the company which recalled the lot. To put it right needed £7m
  • Despite its efforts to protect chip supplies, the DRAM
    shortage delayed manufacture of many PCs and cost Amstrad £6m
  • The PC200 was Amstrad's attempt last Christmas to sell a downmarket PC clone. The machine bombed, partly due to being hopelessly under-specified for the price, but it wasn't helped by a distribution fiasco which led to it being on sale without monitors, manuals or software. It's anyone's guess as to how much this has cost the company

New Computer Express #51 (16 October 1989)

Sugar denies Amstrad sale

Following Amstrad's poor performance and its current low standing in the City, the company's boss and founder Alan Sugar was earlier this week forced to deny the all but unimaginable - a sell off of some of his firm.

Various reports at the weekend suggested that Sugar is looking for a partner to help pull the company through a particularly sticky patch. Analysts were all looking toward electronics giant GEC which has enjoyed -a good relationship with Amstrad in the past.

However, Sugar said that City watchers had got it all wrong. "We have absolutely no plans to link up with anybody -we're determined to go it alone," he said. He claimed that analysts had misunderstood him during a meeting earlier last week. At the time Sugar had said he would be subcontracting some of his manufacturing to GEC.

“Analysts obviously put their fabrication hats on immediately after my meeting with them last Tuesday. They've dreamed up the whole thing themselves,” commented Sugar.

“Of course if IBM offered us £5 a share we'd have to consider it. But the likelihood of that is rather slim." On Monday Amstrad shares stood at 48p.

★ AMSTRAD CPC ★ A voir aussi sur CPCrulez , les sujets suivants pourront vous intéresser...

» Peoples » Amstrad's prospects for 1987 (Popular Computing Weekly)
» Peoples » Amstard PC2000 : Here and Now (New Computer Express)
» Peoples » Marion Vannier : Une Santé de Fer (SVM)
» Peoples » Amstrad bids for stardom in the City (Popular Computing Weekly)
» Peoples » Marion Vannier - Amstrad Console Ou Non (Tilt)
» Peoples » Amstrad defies yen and cuts the cost of its 3 inch discs (Popular Computing Weekly)
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L'Amstrad CPC est une machine 8 bits à base d'un Z80 à 4MHz. Le premier de la gamme fut le CPC 464 en 1984, équipé d'un lecteur de cassettes intégré il se plaçait en concurrent  du Commodore C64 beaucoup plus compliqué à utiliser et plus cher. Ce fut un réel succès et sorti cette même années le CPC 664 équipé d'un lecteur de disquettes trois pouces intégré. Sa vie fut de courte durée puisqu'en 1985 il fut remplacé par le CPC 6128 qui était plus compact, plus soigné et surtout qui avait 128Ko de RAM au lieu de 64Ko.