|★ PEOPLES ★ AMSTRAD RECOVERY SURPRISES THE CITY ★|
|AMSTRAD Recovery Surprises the City (New Computer Express)|
£30 million profit figure better than anticipated
Amstrad confounded its critics and surprised City analysts last week when the company turned in pre-tax profits of £30.1 million for the six months ending December 1989.
While the figures compare badly with the £75.3m announced for the same period in 1988, they are better than financial pundits have been predicting and represent a considerable improvement on the company's only-just-profitable previous six months.
Amstrad's recovery is largely being credited to a good Christmas period which both helped to lift turnover figures (actually up from the previous year at £373.75m) and to reduce the company's backlog of unsold stocks.
The company was cautious about ordering stocks in the latter half of 1988 and used the buoyant Christmas market to offload stereo equipment and video cameras at low or even zero profit levels. These low-margin sales lines are
It is reported that Amstrad will now pull out of the audio market entirely to concentrate on its computer, satellite dish and fax machine divisions, all of which performed reasonably in 1989.
Stocks remain high, though, of one computer line - the PC2386, top of the 2000 series which at one point had to be recalled because of faults in the hard disk drives. The company has enough of the model to meet demands for the next two years at current sales rates.
Amstrad has apparently learnt from the experience, which brought much adverse press comment and affected public confidence in the machines. Chairman Alan Sugar told journalists last week that the company will be paying more attention to the quality of goods in the future by carrying out “all the mundane and boring tasks that you have to do in a high technology business".
Added Sugar: "Anyone in the computer industry reading this will say ‘It's boring. It's what all companies should do'. We're doing it now. Sorry - it won't happen again."
The company is planning to introduce a new product line per month from April this year. As exclusively revealed in Express this week and in our last issue, new computer products in Amstard's pipeline include two enhanced CPC models, a CPC console, a ‘super PPC' portable and an upmarket 3000 series business PC range.
Financial experts are looking for some fast-moving lines from the company as a firmer sign that it is well and truly on the mend, but the City analysts are already predicting £40m or even £45m profits for the financial year as a whole, with the less cautious future-gazers venturing guesses of £65m for next year and up to £90m once the company has fully recovered its equilibrium.
New Computer Express #68 (24 February 1990)