Psion Plc is continuing its recovery from the dark days of 1990-91, increasing pre-tax profit by 9.2% for the interim period ending June 30. The company has managed to achieve a growth in net profit of 8.3% to UKP757,000 while still increasing its push into research and development and pumping money into the North American market. The turnover increase is due to the increase in profit margins, which now stand at 40%. The company’s development costs on the Psion Series 3 palmtop computer are being absorbed and so sales costs have been reduced. The withdrawal of the pound from the Exchange Rate Mechanism and its consequent devaluation helped to boost Psion’s international business, and the company’s corporate sales activity is increasing steadily. Most of the corporate sales side is taken up by Psion’s Organiser and systems applications business. The increase in corporate activity lies in the latter, as the nine year-old Organiser technology, is decreasing in popularity. Organiser sales still stand at 23% of total turnover, which is higher that Psion had allowed for. Managing director David Potter anticipates good sales of the technology for the next half, although the reduction in Organiser business is part of a trend. The discrepancy in the growth of profit before tax (2%) and turnover are due to heavy investment in North America, where Psion has until recently maintained a low-key presence. The movement of German managing director David Elder to president of the Psion US Inc earlier this year heralded an expansion there which grew the number of outlets to its current level of 650 from 200. Potter expects to have 1,000 there by the end of the year. We are investing heavily in the North American market, he said, Our profits would have been UKP600,000 higher if we weren’t. Revenue from the US increased by 38% there in the interim and are expected to reach profitability in the second half. The Psion Series 3, now a two year-old technology, has been complemented with the introduction in late August of the Series 3A (CI No 2,245), a Series 3-type machine which includes speech input. Psion Series 3 price have been reduced accordingly, which could inspire a jump in sales this half. Meanwhile the Series 3A is expected to include speech recognition in 1995, which should be covered by Psion’s decision to increase its research and development expenditure to 6% from 4% of turnover – the figure is still noticeably low for leading-edge high technology firm. Potter waves away this observation mentioning that capital investment included silicon masks and other equipment to fabricate the single integrated chip which is used within the Series 3A.
