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Telemetrix truce in price war

INVESTMENT COLUMN

Tom Stevenson
Thursday 20 July 1995 18:02 EDT
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Telemetrix, another formerly high-flying electronics stock, has taken a beating in the past couple of years. The shares, up 4p to 84p yesterday, are less than half the peak of 195p they briefly reached in October 1993 on excitement over prospects for GTI, a 57 per cent-owned US-quoted subsidiary.

Since then, and despite a commanding market position, GTI's Valor subsidiary, making magnetic components for local area network computer equipment, has been mauled by a price war.

That is showing signs of abating. GTI saw second-quarter profits, excluding low-tech operations, recently put up for sale, advance from $995,000 to $1.87m, after breaking even in the previous two quarters.The recovery has come too late to save Telemetrix's own half-year figures, reported yesterday. Pre-tax profits slipped 6.2 per cent to pounds 4.87m in the six months to June.

Future excitement lies in Trend, the subsidiary that leads the market in hand-held testing devices for ISDN computer networks. Profits were depressed by two product launches in the half-year, but the ISDN market is poised to balloon, boosted by the growth of video-conferencing and the Internet.

Underlying profits of pounds 11m this year would put the shares on a prospective multiple of 11. Good value, with the South African Altron group sitting on 42 per cent and the GTI stake worth around 69p a share.

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