Amstrad Plc yesterday coupled its end of year financial results pre-tax profits up 18% at UKP160.4m, (see Company Results) – with a bold bid to solve its current memory chip shortage. The Brentwood, Essex-based company announced that it had made a UKP45m cash investment in US memory chip manufacturer Micron Technology Inc, Boise, Idaho, which […]
Amstrad Plc yesterday coupled its end of year financial results pre-tax profits up 18% at UKP160.4m, (see Company Results) – with a bold bid to solve its current memory chip shortage. The Brentwood, Essex-based company announced that it had made a UKP45m cash investment in US memory chip manufacturer Micron Technology Inc, Boise, Idaho, which already has a similar agreement with Intel Corp, and that chairman Alan Sugar would be joining Micron’s board. Under the agreement Amstrad will be entitled to purchase up to 9% of Micron’s DRAM and other semiconductor production for three years starting January 1 1989. Amstrad will subscribe for 3.57m new shares – 9% of Micron’s enlarged share capital – at a price of $21 per share, valuing the company at UKP500m. Micron is riding high on the memory chip shortage at the moment: it returned pre-tax profits of $118.2m this year, against a loss of $22.9m in 1987, on sales that more than trebled to $300.5m. Commenting on the move Sugar said that though it doesn’t guarantee immediate delivery of all the memory chips needed, it will ensure quicker deliveries than we would otherwise have expected. Amstrad admits that it has not been able to meet current demand for machines and is shifting memory consumption into high sales value products. However despite shortages and minimum growth in the home market – sales in the UK stood at UKP266m, 1% up from last year – Amstrad was able to post a 22% increase in turnover. Spain experienced 74% growth over last year on the back of increased sales of the PC1640 and the CPC range of home computers, while the introduction of professional computers and video products helped boost French sales to UKP121m from UKP93m. Sales in North America totalled UKP34m, representing 5% of turnover, and Italy recorded sales of UKP27m, representing 4% of turnover. The year saw the establishment of wholly owned distribution companies in Italy, Germany, Holland, Belgium and Australia and the winding down of existing distribution operations in those countries. As a result turnover in Germany, Holland and Belgium, which jointly accounted for 12% of group turnover last year, has been negligible during the wind-down period. However Sugar emphasised that activities in all markets are profitable.
100,000 PC2000s by year-end? Sales were spread across the company’s five main product groups. Professional computers was the largest group accounting for 54.1% of turnover, up from 47% last time: next was home computers with 21.7%, down from 31.4%: then video at 14.3%, up from 10.2%: printers at 5.1%, up from 4.4%: and finally audio at 4.8%, down from 7.0%. The chairman revealed that the company had shifted nearly 700,000 professional computers, the same number of home computers, 450,000 video products, 250,000 printers and 400,000 audio units. He said the PC1640 computer had broken into the corporate market and had generally been a considerable success during the period; while sales of the PCW9512 word processor, PPC range of personal computers and TVR3 combined television and video recorder were singled out for praise. Looking to the future Sugar predicted that the new range business computers, the PC2000 series, will dwarf our past achievements. The company expects introduction of the 80826 and 80386 based computers to have a significant effect in the second half of the financial year, with a major effect in the following year – and word is that far from not being available until January, word is that the company hopes to get 100,000 of the PC2000s out before the end of the year, 80,000 in January and February and 50,000 a month thereafter. Amstrad has also entered the Comcorder and satellite receiver markets, both of which are expected to provide profit and growth in the second half of the financial year. On the marketing front the Sinclair brand name is now on the entertainment sector of the home computer products, while the Amstrad brand name will be reserved for business products. The Fidelity brand name, acquired for UKP3.1m during the year, will be the long term bra
nd name on audio, video recorder and television products.