London handheld computer and networking equipment manufacturer Psion showed a huge drop in pretax profits for the first half of the fiscal year, ended June 30, citing poor sales of its computers.
Psion is one of the handheld computing pioneers and its products are widely used in Europe. The company recently expanded efforts to penetrate the fast-growing U.S. market, which is dominated by products running the Palm operating system or Microsoft Windows CE.
Psion reported revenue of $103.1 million, down $16.4 million from the first half of 1998, and pretax income of $162,379, down from $6.5 million in the first half of 1998.
Palmtop sales fell 34% in the first half, in part because of decreasing demand for the Series 5. The company expects its second half results to be stronger because of new products, including the Series 5mx and Series 7.
Regionally, North America was the only market showing an increase in sales, with $13.2 million, up from $9.6 million. Sales in the U.K. dropped from $51.1 million in 1998 to $36.2 million, and sales in Europe dropped from $53.9 million in the first half of 1998 to $48.7 million for the first half of this fiscal year.
Psion also claimed that its ongoing investment in the Symbian joint venture with Motorola, L.M. Ericsson, Nokia and Matsushita, would continue to constrain its short-term profitability, according to Chief Executive David Levin. Symbian is developing the EPOC operating system for what the companies hope will be a standard in next-generation mobile devices.
In the second quarter, Matsushita purchased an 8.8% stake in Symbian for $35.7 million+, bringing Psion's share to 28.1%. Symbian also purchased two software companies during the first half of the fiscal year, increasing its number of employees to 338.
The venture is expected to move into profitability in the fourth quarter of 2001, according to Psion.
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