To: Mika Kukkanen who wrote (2197 ) 9/16/1999 3:05:00 PM From: Ruffian Respond to of 34857
Trouble For Symbian? To: Jill N. (41474 ) From: ruffian Thursday, Sep 16 1999 3:04PM ET Reply # of 41475 Symbian In Trouble?> Thursday September 16, 2:40 pm Eastern Time FOCUS-Symbian start-up costs hit Psion (Adds closing share price para 4) By Kirstin Ridley LONDON, Sept 16 (Reuters) - British palmtop computer company Psion Plc on Thursday posted an expected sharp drop in half year profits amid falling sales and continuing start-up losses from its Symbian joint venture with leading cellphone manufacturers. Although Psion warned that further investments in emerging growth markets and Symbian would curb short-term profits, it forecast a stronger second half with new products from its Psion Computers and Psion Enterprise arms helping to boost revenues. Headline pre-tax profits fell to 0.1 million pounds ($160,200) from 4.1 million. But after one-off charges and a 2.8 million pound hit from its share of Symbian losses, profits slid to 57,000 pounds on a 12 percent drop in sales to 64.2 million. ''The decline in revenues and profitability from a year ago had been well flagged as old palmtop models have been phased out and new models introduced in the second half,'' noted Ian Burgess, IT analyst at Credit Suisse First Boston. Psion shares slipped 26.5p, or just under three percent, to close at 880p. Palmtop sales fell by 34 percent to 24.5 million pounds as demand weakened for the group's older Series 5 in anticipation of the new Series 5mx. The new product includes e-mail and web-browsing and shipments began at the end of June. Psion's Series 7 computer, a variant of the Psion netBook -- which comes with mobile Internet access and targets business clients -- was launched in early September and the group plans to ship a new palmtop product at the end of the third quarter. But the key driver of Psion's hefty share price valuations depend on Symbian -- a partnership that has drawn battle lines against rival software developed by Microsoft Corp (Nasdaq:MSFT - news) and is expected to become a major force in the telecoms market. Psion is the largest shareholder in Symbian, which partners Motorola (NYSE:MOT - news) of the U.S., Sweden's Ericsson , Nokia of Finland and Japan's Matsushita Communication Industrial Co . Symbian is building products around Psion's EPOC operating system for the next generation of smart cellphones and palm-top computers with Internet access. Psion said the alliance was ''progressing well'' and was expected to move into monthly profit towards end-2001, in line with analyst expectations. Symbian is developing EPOC across a range of wireless devices and will launch its latest version, ER6, in the second quarter of 2000 with volume sales following. Despite reports that Microsoft has approached Psion's Symbian partners to woo them away from Psion, Chief Executive David Levin told a conference call he was confident they would continue to develop products around Symbian software. ''We know that Microsoft will continue to talk to them,'' he said. But he also held out the prospect of possible future cooperation with the U.S. software giant. ''Microsoft is an interesting company and we'd be delighted to achieve some sort of cooperation with them if that were the right thing. But at this point I wouldn't anticiapte it,'' he added. Psion, which warned in March that investments in Symbian would take a 6.0 million to 7.0 million pound bite out of 1999 earnings, said it was happy with analyst forecasts of annual profits of tax before exceptionals of around 5.0 million pounds. Armed with cash of 72.7 million pounds at the half year, the group also said it would seek acquisitions, partnerships or investments in the ''substantial opportunities'' in emerging growth markets for mobile Internet access products and systems.