Companies: ZEN   

Disc drive technology group Zen Research has warned it will not make significant sales of Zen-enabled DVD-ROM drives in 2001 following delays in testing, writes Nancy Smith.

Shares in fully-listed Zen (ZEN) dropped 34 per cent to 48p when the company revealed the problem today, coupled with news of a doubled first quarter loss of $4.9 million (£3.5 million). Sales more than doubled to $182,000, as did research and development spending, which reached $3.1 million in the first three months.

The company says the delays are now behind it. But the unsettled PC and components market, which is labouring under price pressures and product oversupply, is causing uncertainty.

More cheerfully, the recent acquisition of chip developer Silicon Value for $22.25 million last month is seen as good news for the group. Silicon Value's chip designs can reduce the size of a chip by 50 per cent, cutting the cost of the silicon and enabling the company to offer products to silicon suppliers under pressure to produce cheaper and smaller chips.

Zen has signed a licencing agreement with a DVD video player company, which is already generating revenue in the form of engineering fees. Royalties expected to come through next year. Meanwhile, Zen co-founder and chairman Davidi Gilo has added the role of chief executive officer to his responsibilties. Former chief executive officer Emil Jachmann, becomes executive vice-president and will remain as a director.

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