Olivetti Results Fail to Impress Sceptics

Analysts remain concerned about the financial position of Italian IT group Olivetti last week, despite the release of confirmed year-end results for 1996.

Last week, Olivetti reported consolidated group pre-tax losses of L820.4 billion for 1996, down 46 per cent from a pre-tax loss of L1,523.2 billion in 1996.

In an attempt to clean up the group?s balance sheet, parent company Olivetti SpA has written off L1,432.6 billion of investments. It has been forced to call an emergency shareholders? meeting in June to approve a proposed capital reduction as a result. This will effect a fall in the total number of Olivetti shares in circulation, although the value will be maintained.

But analysts were not reassured by the upward turn in Olivetti?s figures. Nimrod Schwartzman, European and electronics analyst at James Capel, said: ?I?m very reluctant to buy into what Olivetti is doing. What we saw today was not comforting.?

Olivetti Personal Computers was a loss making business, but while it has stopped haemorrhaging, the systems and services division has still lost a lot of money. Further restructuring will need to take place in 1997. It will need to raise more money and there is likely to be a further rights issue

Group net losses totalled L915 billion, down 43 per cent from L1,597.9 billion in 1995, and included provisions of L208.7 billion for future expenses and risks. Of this, L59.6 billion was to cover losses for Q1 of 1997 at Olivetti PCs, which was sold earlier this year to the Piedmont Investment group. Group consolidated sales fell 14.6 per cent to L8,304 billion.

Last month Olivetti PCs made a number of staff cuts, and was looking to take on more distributors and resellers (PC Dealer, 19 March).