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Wednesday, 11 July, 2001, 12:29 GMT 13:29 UK
Troubled times for Psion
Psion Revo
Psion: Promising much but failed to deliver
By the BBC's John Moylan

Last year Psion was in the FTSE 100 and basking in the glow of the high tech share boom.

Since then it has been one of the leading British victims of the technology company rout, with its shares falling more than 95%.

As the company announces that it will no longer make new handheld devices, its shares are on the slide again.

Psion also says it will cancel the launch of its planned Bluetooth-enabled products, as it switches its focus to developing digital networks for businesses.

Within minutes of the news, the stock fell 20% to 55.25p. More than 95% below its March 2000 peak.

Serious questions

All this leaves Psion facing serious questions about its future.

In March the company unveiled its full year results and a structural shake-up, again sending its shares down 20%.

The headline news looks bad with the scrapping of a major part of its business, poor profits and job losses.

But Psion is a company in the midst of huge change - the question is: does it still have its finger on the technology pulse?

Motorola aftermath

Psion's fall from grace has been swift.

In January came the shock news that its ODIN joint venture with Motorola was over.

The plan was to produce the first fully integrated mobile phone-cum-organiser.

The first product was due within months, but the company confirmed that it would not continue the project alone.

The news was a major setback for Psion, which seemed ideally placed to take advantage of the convergence between mobile telephony and computing.

Handheld devices

Sales of Psion's core handheld products - the Series 5 and Revo - were under pressure as rival products stole the limelight.

Sales of devices like the Palm Pilot have soared while Psion struggled to make inroads in the US market.

Technology Analyst Philip Smith at Teather & Greenwood saw the writing on the wall.

"We believe the handheld business will come under increased competitive threat and that will drive down margins," he said in March.

But right up until recently, chief executive David Levin maintained that the company would remain committed to the handheld market.

His arguments that Psion products would remain mass market now seem to have gone by the wayside.

Restructuring

With the new focus on business solutions, Psion is again restructuring.

Earlier in the year it merged handheld computers, modems and digital radio divisions to take advantage of core skills common to all.

The most recent restructuring will result in 250 job losses and a charge of 29m.

The same division - called Psion Digital Solutions - has already suffered 100 job cuts back in March.

Symbian

For Psion much now hangs on the success of Symbian.

The company says it will concentrate on its investment in the Symbian mobile phone software operations.

It has a 28% stake in the venture with Nokia, Ericsson, Motorola and Matsushita to develop operating systems for mobile phones.

Earlier this year the group signed up Siemens as a licensee - giving it the world's top five mobile phone makers.

But Psion has confirmed that the delays to the roll out of GPRS mobile phone technology means Symbian-based products will come to the market late, hitting volumes and revenues.

The signalled float of Symbian - which some have valued at 5bn - may now have to wait until next year.

Symbian's EPOC operating system still has a shot at becoming the de-facto operating system of choice for next generation internet-enabled phones, but sector watchers have noted that some of the Symbian partners have embarked on projects with Microsoft and Palm.

Teklogix

Psion's Teklogix business which supplies wireless systems to businesses will now be of key importance.

Psion used its buoyant share price last summer for the 250m acquisition of the Canadian company.

The business accounts for 45% of Psion's revenues and a much higher percentage of profits.

Viewed as the number two company in a fast growing sector - Teklogix could help steady Psion during a period of uncertainty.

The future

So where does all of this leave the once bright hope of Britain's technology sector?

Few doubt its expertise in wireless technology and its Teklogix business looks robust.

With Symbian it appears to have a stake in the operating system that could dominate wireless devices in the years to come.

But some believe the company missed a huge opportunity in the consumer handheld computer market.

Psion promises much but right now is failing to deliver.

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Psion to float Symbian
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Psion buys Teklogix
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Psion pockets Motorola deal
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Psion opts for mobile web
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