The company has benefited from the very strong demand for BSkyB's digital TV service

Sir Alan Sugar

But Amstrad remains confident in the long term potential of the product.

It says it will recoup the cost of subsidies currently maintaining low prices in the initial roll-out.

The e-m@iler, whose current roll-out phase aims to get 120,000 into homes, is a telephone with email and fax capability, which also offers on-screen advertising.

Advertisers on board

Following trials in March and April, limited supplies were released to shops in May and a full roll-out began this month.

The cost of launching and developing the product, along with subsidising it to make it more attractive for a mass market, had all cost the company this year.

Chairman Sir Alan Sugar said: "The subsidy is planned to be recouped by a longterm revenue stream derived from a share of e-mail call revenue, SMS [text] message charges, revenue from advertisements sent down the line to customers and from associated e-commerce transactions."

Advertisers signed up include satellite broadcaster BSkyB, insurer Direct Line and mail order firm Britannia Music.

The �2.3m loss incurred by the division developing the e-m@iler was not enough to outweigh the 85% growth in profits from the rest of the company.

The fast growth of digital television has led to a big demand for its digital satellite decoder set-top boxes.

Mobile phones

This helped the company to pre-tax profits for the year to 30 June of �15.4m, compared to �9.1m the year before.

"The company has benefited from the very strong demand for BSkyB's digital TV service which should continue with BSkyB having announced they are on target to deliver 5 million subscribers by the end of 2000 and planning to reach a total of 7 million digital subscribers by the end of 2003," said Sir Alan.

Amstrad also said it would develop a mobile phone with GSM (global standard for mobiles) technology, with volume production due to begin in the fourth quarter.

Production, using a manufacturing partner in the Far East would begin soon, the company said.

"Whilst our existing businesses are geared to the UK market, our mobile phone business will have significant international opportunities," the company added.