Amstrad plunges to its first-ever loss
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.AMSTRAD, the troubled computer and electronics company, plunged to its first pre-tax loss last year - of pounds 70.9m from a profit of pounds 20.1m a year earlier. The loss per share is 9.4p and no final dividend will be paid.
Alan Sugar, the company's founder and chairman, has informed shareholders he may take Amstrad private by offering 30p a share, valuing the company at about pounds 170m.
The company's share price rose 1p yesterday to 25p, compared with its record high in 1988 of 235p. Mr Sugar, who already has a 35.4 per cent stake in Amstrad, has consistently complained that the City fails to understand his business.
Amstrad blamed recession in its main markets and the deep downturn in the computer industry for the loss. Turnover for the year to 30 June fell to pounds 356.58m from pounds 528.4m as computer companies savagely cut prices to retain market share. Mr Sugar said the focus had been on reducing stock in order to remain competitive.
He said: 'As technology advances, the shelf life of the product is very limited and rapid action was required to dispose of inventory, not only for cash liquidity purposes, but also to ensure that our inventory was not made up of outdated merchandise.'
Mr Sugar also said that losses were exacerbated by the company's withdrawal from the home computer market, which accounted for less than 5 per cent of sales compared with 10.5 per cent the previous year. However, he said that sales of satellite reception equipment held up well in Britain and Germany.
In the UK, which accounts for 40 per cent of Amstrad's total business, sales fell to pounds 142m last year from pounds 237m a year earlier.
A spokesman for the company said: 'If you look across Europe, almost all our markets have seen a decline that reflects a drop in consumer spending rather than loss of market share.'
Analysts said it was unlikely that the computer sector, which on the professional side still accounts for 40 per cent of Amstrad's business, would revive during the current year. Although unit sales are expected to rise, revenues will be hit by the continued price wars. Since 1991, computer prices have fallen by up to two-thirds.
Amstrad said that the cash position was strong at a net balance of pounds 113.8m at the year end. That would be reduced, however, during the first half of 1992/3 as the company rebuilt inventories to support sales.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments