Psion has announced a loss of £13m for the first half of the year, compared with a profit of £3m in the same period last year.

The company announced in July that it was pulling out of the market for handheld computers as part of a wide ranging restructuring of its business.

When charges for goodwill and the company's reorganisation are taken into account, Psion's loss rose to £54m.

The company's chairman David Potter said current trading was in line with expectations.

"As a result of the changes made, the board expects an improved performance from the restructured group going forward," he said.

He also said the full benefits of the changes made this year would be seen in 2002.

Restructuring costs

Psion announced in July this year that it was pulling out of the production of personal digital assistants (PDAs) or handheld computers.

The company said the reorganisation would entail it taking a charge of £29m to cover redundancy payments and other costs. Of this, £18.4m has been included in the first-half figures.

Overall the company had managed to sell between five and six million PDAs since it started making them in the 1980s.

But in recent years the company has faced fierce competition from rivals Palm and Compaq.

An oversupply of products, combined with the economic slowdown in the US, meant Psion decided it was better to pull out of the consumer market and concentrate on its other interests.

The company said it will continue to market and support its existing PDA products, but said it thinks demand for these goods will "progressively decline".

Psion Teklogix

Psion is now concentrating its efforts on its business oriented division Psion Teklogix, and its Symbian mobile phone software operations.

Psion Teklogix sells hardware and software to help companies monitor their supply chains.

The company said sales at the division were holding up well despite the current slowdown in investment spending.

But it warned "the company remains exposed to the risk of further contraction in capital spending, particularly as its business activity worldwide is weighted towards the second half of the year".

Outlook diminished

Symbian is a joint venture together with Ericsson, Motorola, Matsushita and Nokia.

It will allow new-generation mobile phones, computers and handheld devices to communicate with each other.

But the project has been affected by the problems in the telecoms sector.

"The market slowdown experienced in the cellular phone industry has diminished the short term outlook for Symbian OS-based products," the company said.

As a result of this, Psion said extra funding would be needed next year, but the floating of Symbian as a separate company remained the ultimate aim.