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Psion/Amstrad - Ex-Dataflex exec pans Amstrad's 'can of worms'

Martin Veitch ZDNet.co.uk

Published: 30 Jul 1996 12:39 BST

Not everybody was surprised by the sudden death of the Amstrad/Psion deal last Friday. Philip Benge, former marketing director of Amstrad-owned modem maker Dataflex, yesterday lashed out at the structure of the once-impregnable electronics vendor, calling the firm "a can of worms".

Benge, who left the company earlier this year for UK security software concern Reflex Magnetics, said of the proposed acquisition: "I'm hardly surprised it's fallen through. Amstrad is a can of worms apart from Viglen [the direct sales PC subsidiary].

"They've put £40 million into DanCall [Amstrad's cellular phone business] but had problems getting production right last year, and when they did they couldn't get the sales volume up. DanCall has the potential to do well; it's not a dog and not a star. Dataflex is a rump business; Amstrad's old, core business is a dog; and BetaCom [Amstrad's telecomms business] is a cash cow. With Dataflex they've fallen between two stools; they wanted OEMs and they virtually abandoned the ISDN development which was in a leadership position.

"Viglen is the jewel in the crown, a lovely company. But if you look at all the other parts, I think that's why the deal floundered. Psion would have been very disappointed by what they saw under the surface. I think it was a very generous offer; I wouldn't value their shares at £1, never mind £2."

Benge said Amstrad had switched direction too often recently, killing off or reducing their investment in areas such as Amstrad PCs, satellite and fax, in favour of new areas such as the cosmetics division.

However, even Benge doesn't dispute that Amstrad is still sitting on a mountain of cash and that Sugar could yet create profitable new divisions. "[Sugar] is straight and he's honest ... he has this tremendous nous for what will sell."