Following poorly received interim results yesterday, Amstrad has announced that its e-m@iler telephone-based product has been adopted in a pilot Neighbourhood Watch project by the Lancashire police, writes Ben Cobley.

Amstrad's e-m@iler, which incorporates e-mail facilities in a conventional home telephone, is currently selling at almost £90, which is below cost. But Amstrad's 80 per cent owned subsidiary Amserve is striving to build up a big enough installed base to reap profits through recurring revenues.

In addition to revenues from the use of the e-mail facilities (which average £20 a year per user), Amstrad hopes to open e-m@iler screens to the wiles of advertisers. Amstrad's advert delivery system will enable advertisers to direct their sales efforts according to its demographic information.

The thinking is that the more users there are, the more incentive there will be for advertisers. However, Amserve is going to lose money until recurring revenues become significant enough to justify the subsidy being put on the products.

For the six months to the end of December, Amserve, 20 per cent owned by Dixons, made a loss of £4.9 million. Amstrad has been very bullish about the e-m@iler, of which about 77,000 units have apparently been sold since its March launch, but analysts believe today's announcement might be a sign that it has become aware the market is not so sure.

There are 150,000 Neighbourhood Watch co-ordinators in the UK at the moment, suggesting there is real potential for Amstrad's product. Under the pilot scheme, only 62 units are being distributed initially, though this is planned to rise to 500 by the end of May.

The market sent Amstrad shares down seven per cent yesterday, after interim figures showed first half pre-tax profits down 82 per cent to £1.5 million on sales down 32 per cent at £41.3 million. Today's announcement failed to prevent them falling another one per cent to 111.5p.

House broker Beeson Gregory expects £3.1 million at the pre-tax line for the full year, rising to £9.5 million in 2002. We shall see.