Psion's premature sign-off

ALL THOSE people who have kept the faith with David Potter and Psion, in the hope of reaping rich benefits from the Symbian stake, rightly feel disappointed. The sharp reaction in the share price speaks for itself. Neither the value of the sale nor the reasons for selling look convincing.

Psion's desultory promise that shareholders may be given back some cash is too vague. The Symbian technology for new-generation mobile phones is turning out to be a worthy rival to Microsoft. To pull out of the investment at this stage looks daft.

So what happens to Symbian now? It is placed in a difficult position by Psion's decision to sell to Nokia, another major shareholder. As a 32% holder of Symbian shares Nokia, although clearly an interested party, was just another member of an interested consortium.

As the owner of more than 60% of the shares, Nokia will be viewed with suspicion by rival handset makers with an interest in Symbian - including Sony Ericsson, which has been one of the pioneers of deploying the technology.

One way in which Symbian could put some distance between itself and Nokia is by the appointment of a powerful independent chairman who would guarantee fair play. Under this new leadership chief executive David Levin and his team of software engineers working in south London could move to prepare the company for flotation.

The trouble is that by hastening its sale, Psion has diminished immediately the potential value of an enterprise that could have been worth up to 1bn. That also means rushing it to market too quickly when it has rich enough investors to allow it to develop a financial record before testing the public waters.

Florida flotsam

THE BOCA Raton communique has done nothing to turn the tide on foreign exchanges. If anything it has quickened the pace towards a euro valued at $1.30 and the two-dollar pound.

The Europeans and Japanese came away from the Florida meeting clutching a 'peace in our time' statement in that the Americans agreed to sign up to the idea 'that excess volatility and disorderly movements in exchange rates are undesirable for economic growth'.

That is seen by analyst Stephen Jen, of Morgan Stanley, as giving the Japanese the right to keep on intervening to stem the rise in the yen.

Perhaps more interesting over the next few months is the impact of the Group of Seven meeting on interest rates. The euro - and the pound for that matter - is moving into territory that could be harmful to recovery and growth. It is possible that weaker-than-expected British manufacturing data from December may reflect price pressures on the export sector.

In euroland the situation is even more serious. Growth is elusive enough already without the burden of an overvalued currency. According to Capital Economics, this 'will force the European Central Bank to cut eurozone interest rates this summer to 1.5%'.

One possibility that the Europeans could have hoped for in Florida was an undertaking from the US to drop the reference to 'flexibility' in exchange rates which triggered the dollar's fall after Dubai in September 2003. Some feared that if the Americans had gone along with this it might have encouraged the ECB, with its insistence on monetary probity, to actually raise interest rates before the end of the year.

This is a risk that no-one wants to countenance. Many argue that the 1987 stock market crash was a direct result of a clash of policy between the US and Bundesbank at the Louvre which led the German-central bank to hike interest rates. That is a disaster to be avoided at all costs in an American election year when the incumbent is under pressure.

Florida was an uncomfortable compromise that may yet see the dollar plunge towards the lows reached in the early 1990s, before the Americans decide that they really believe in a strong dollar.

Eddington lift

THIRD-QUARTER results from British Airways show that recovery is on the way. Most of the uplift is still coming from costs, but revenues from vital premium traffic and cargo are on the mend. The balance sheet is improving with net debt down to £4.5bn from £6.5bn when Rod Eddington took the controls.

At some point in the next year or so, probably when new long-haul aircraft have to be ordered, a balance-repairing rights issue may become necessary. But the priority at present is slimming down without the distraction of a capital reorganisation.