Psion to drop PDAs in restructure

Competition forces vendor to drop planned products and axe 250 staff

Psion is to step away from the personal digital assistant (PDA) market to concentrate its efforts on digital networking. The move, which will lead to 250 job cuts, comes after the company's decision to make 100 staff redundant in March.

The change of direction follows Psion's failure to overcome competition from rivals such as Visor, Palm and Compaq, and will refocus it squarely at the business market.

The company will continue to sell and support existing equipment, such as its Revo and Series 5 hand-helds, but the development of new lines, including the company's planned Bluetooth products, has been abandoned.

Chief executive David Levin defended the company's decision, saying it had struggled in "weak and oversupplied markets" while claiming that the market for the company's cancelled line of Bluetooth products had not evolved. "Bluetooth is late on the uptake and much smaller than anticipated," he said.

The firm blamed its change of strategy on the US economic slowdown and the oversupply of rival equipment from Microsoft operating system-based PDAs. Psion will take on a charge of £29m to cover business restructuring.

Savings made from the cuts will be ploughed largely into the company's Symbian mobile phone software which will be used by Nokia in its next generation of handsets.

In addition, the firm reported provisional turnover for the Psion Group in the first half of 2001 at £99m, an increase of five per cent on the first half of 2000.

In contrast, first-half turnover for Psion Digital, the unit which makes PDAs and modems, fell by 53 per cent to £36m compared with £77m in the same period last year.

Levin said that, despite the lay-offs and restructuring, he was confident that Psion was still on track to produce profitable results in the second half of its financial year.