Investors bale out of CentreGold
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Your support makes all the difference.Some investors baled out of CentreGold yesterday after the computer software and games company issued a shock warning about trading, writes John Shepherd.
The shares, which have rarely been above the 125p at which they were floated 16 months ago, collapsed from 97p to a record low of 60p after the announcement.
The savage price war among retailers on computer games cartridges is to blame for most of the company's problems. Retail prices at Christmas for some cartridges, which cost around £17 to make, were as low as £9.99.
Sony and Sega will introduce new games hardware for compact discs later this year, which, many industry observers feel, will lead to the demise of the cartridge.
Analysts' predictions of a 25 per cent rise in CentreGold's profits to £5m for the year to July were left high and dry by the warning that the company would lose £3.6m in the first half. Some £2.9m of the loss relates to stock provisions.
The interim dividend is being passed, and a final payment is by no means certain. At best, analysts now expect a loss of £1.6m for the year and a profit of £4m for 1995/96.
More than 500,000 shares were traded in the tightly-held stock yesterday.
The collapse in the share price comes four months after Geoff Brown, chief executive, sold 1.38 million at 98p each. He said yesterday: "The core message is that the foundations are totally solid. It's just that the walls have been breached. I'm not jumping out of the window."
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