Sugars pin hopes on e-mailer

CONSUMER electronics group Amstrad is planning a third generation of its low-priced web console, the e-mailer. The mastermind behind the new product, which will hit the shops next spring, is commercial director Simon Sugar, 34. He is the eldest son of the company's founder and executive chairman, Sir Alan Sugar, who began amassing a fortune 30 years ago with the Amstrad rack hi-fi and followed that in the 1980s with the affordable home computer.

Sugar Jnr says the launch of a new phone-with-a-screen will not prevent Amstrad from fulfilling its promise of turning a profit from its email venture by next June.

The future success of the e-mailer - which was derided by market analysts when launched in 2000 - and in turn of the whole Amstrad business, rests squarely with him. He says the new version will have a colour screen and 'two other killer features as well as being astonishingly competitive on price'.

The operations director for all of Amstrad and in charge of the Amserve subsidiary which governs the e-mailer business, Sugar Jnr is busy pitching the e-mailer concept to retailers and the public. For the time being, Amstrad continues to subsidise the loss-making Amserve with profits generated from its TV set-top boxes business. The company is one of BSkyB's four main suppliers.

While the group swung into a £3.8m annual pre-tax profit in June from losses of £1.8m the year before, Amserve losses widened to £6.1m from £6m. The Sugars believe, however, that the e-mailer will soon transform the fortunes of Amstrad, a public company 57% owned by Sir Alan and Amshold, the family's private company. They want Amstrad to generate revenues beyond the point of sale.

'We are no longer just shifting boxes - yes, Sky is going well - but every day we sell more e-mailers, we create more regular annual revenue,' says Sugar Jnr. He cites his father's comparison of Amstrad's new business model to that of a 'mini Vodafone or even BSkyB'.

E-mailer gets its income by charging for emails, text messages and internet access and from a growing advertising base. Each unit retails for £49.99 and takes about a year to pay for itself. The third-generation e-mailer will be subsidised but 'as the build costs are coming down, it may not be subsidised to the same level of the other ones', says Sugar.

He adds there are now about 300,000 e-mailer users, up from 255,000 at June's year-end. The business then reported revenue of £18,000 a day, or £6.6m a year, against £13,000 a day in February.

'With the increased user base, you don't have to be clever to work out the maths to see how quickly we are making money,' he says.

Amstrad shares are trading at 137p, up nearly sevenfold since February's 12-month low of 20 1/2p, giving the company a market value of £108m. The rise may be a sign that investors are beginning to share the Sugars' belief in the transforming powers of the e-mailer.

But don't expect them to come over all cosy with analyst presentations. 'Sir Alan just doesn't speak with analysts,' Simon explains - and it's a family tradition he looks set to keep.