Poor computer sales hit Psion hard, as did continued investment in its joint venture Symbian, which is developing a system to allow Internet access on mobile phones.

Pre-tax profits fell to £57,000 from £4.1m, while sales slid by 12% to £64.2m.

But Psion chief executive David Levin says it is still happy with analysts' forecasts of £5m pre-tax profit for the whole year.

"We did say at the beginning that this was going to be a year of two halves," Levin said, adding that already revenues at Psion Computers have picked up in June, July and August following the launch of the Series 5mx.

The bad news for shareholders is that continued investment in Symbian and other ventures is likely to dampen profits, Levin said.

Symbian future

Psion is relying heavily on Symbian for its future success, but the joint venture is expected to take a bit of £6m to £7m out of earnings in 1999.

Nokia is part of the Symbian joint venture

Psion created Symbian with leading mobile makers, Nokia, Ericsson and Motorola to develop a system allowing Internet access on mobile phones.

Their operating system, Epoc, is touted as the standard for next generation cell phones, a distinct possibility since these manufacturers make 80% of the world's mobile phones.

Levin maintains that Symbian is on track to break even in the last month of 2001. No decision to float Symbian is likely to be made until after it starts to turn a profit, with its first year full profit expected in 2002, Levin added.

Symbian faces competition from Microsoft, which has teamed up with British Telecom to create Internet services via mobile phones and hand-held computers.

Money to burn

Levin is quick to point out that the company is cash-rich and ready to go shopping for start-up Internet companies.

It had £72.7m on its balance sheet on 30 June, compared with £24.1m a year earlier.

Levin outlined his intention to buy before, but stresses there is no time limit on when they make their move.