Can Tadpole jump higher?

The Investment Column

Has the tide turned at Tadpole Technology? Yesterday the shares, among the most volatile and popular on the stock market, rose 6p to 59p as the computer laptop specialist released interim results showing a reduction in pre-tax losses from pounds 5.9m to pounds 1.7m.

The shares had been sinking fast since computer giant IBM pulled the plug on selling Tadpole's computer notebook and ambitious sales and profit forecasts were missed by a country mile.

From a high of 440p just 18 months ago, Tadpole plummeted to an all-time low of 43p before stabilising. But with the company apparently swimming back into the black - if not this year then perhaps in 1998 - investors may be tempted to back its world-beating technology and take the plunge at these levels. They should look before they leap.

A lot is also riding on Alphabook, the world's most powerful notebook computer which was developed with Digital of the US. First customer shipments took place in February, but it is far too soon to know whether revenues will match the hype. That is Tadpole's basic problem: it has yet to show it can manufacture volume products at the right price and sell them at a profit.

Tadpole's ability to spring unpleasant surprises is another concern. For example, second-quarter revenues of pounds 6m were actually pounds 1m below first- quarter sales. Tadpole blamed the shortfall on delays with a board manufacturing contract, but shareholders could be forgiven a sense of deja vu.

All of which suggests Tadpole will struggle to ever make the substantial profits that would justify a much higher share price. True, shares in Psion, another British company to claim world leadership in portable computers, sprouted wings in the last year.

But in a sector where products enjoy short life-cycles, Tadpole will have to move far more nimbly to realise its undisputed commercial potential. Best watched from the edge of the pond.