Amstrad Plc yesterday pulled out all the stops to try to stop the rot in its share price, announcing a major management restructuring to answer the criticism that management is spread much too thin, and plans to seek permission to buy in its own shares to underpin the price – all to little avail it […]
Amstrad Plc yesterday pulled out all the stops to try to stop the rot in its share price, announcing a major management restructuring to answer the criticism that management is spread much too thin, and plans to seek permission to buy in its own shares to underpin the price – all to little avail it seems, with most analysts revising their forecasts for the current year down to around UKP40m pre-tax and one going as low as UKP25m, compared with the UKP76.6m announced yesterday for the year to June 1989. One of the biggest worries is that what now must be seen as the PC2000 disaster caused the company, which traditionally maintains a net cash position, to end the year with net interest payable of UKP1.9m. This was because forward bookings of advertising in all major European markets were non-cancellable and had to go ahead during the hiatus caused by the recall of the PC2286 and 2386 with the faulty disk controllers. Amstrad is sticking to its guns on higher end personal computers, saying that this is where it sees its potential growth in the personal computer business. Indeed computers now overwhelmingly dominate the business, with professional computers accounting for 55.4% of the total, UKP347m; home computers – the Sinclair brand – were down to UKP100.6m, 16.1%, against 21.7% last year; printers were 5.6% at UKP34.9m against 5.1% last year; audio slumped to 3.4%, UKP21.4m against 4.8%, and the other growth area was video and satellite, 19.5% at UKP122.3m against 14.3% last year. And for followers of Amstrad, there is a shock in the turnover figures: at UKP626.3m, they are flat with those for last year. As reported, there were UKP15m of provisions for the costs of inventory modifications and writedowns. The management reorganisation involves the creation of an Amstrad UK Ltd under Barry Young as managing director Young was responsible for development of Amstrad Distribution Ltd; the new UK country operation will stand alongside the foreign subsidiaries and report to the group. Malcolm Miller becomes Group International Marketing & Sales Director. The finance team has also been strengthened, with Peter Thoms coming in as Group Finance Director from Gillette Co, with Ken Ashcroft moving over to become Corporate Finance Director. Also joinging the team – from Mars Ltd, is John Benjamin, who is Group Manufacturing Director designate. The company is promising a string of hot new products, but warns that moves to get back into a net cash position will be at the expense of chasing profits, but to sweeten the pill, the company proposes to underpin the share price by seeking permission to buy in shares.