Dragon Rescue Drama

The Dragon 32 was hauled back from the brink last week by a hastily assembled £2.5 million rescue package.

Dragon Data was baled out by its shareholders last Friday to stop the Dragon following the Newbrain into limbo. One of the UK's most popular micros, with sales estimated at 80,000 since its launch 12 months ago, the Dragon almost dragged its maker into the same cash-flow swamp that claimed Grundy Business Systems (PCN, issue 26).

According to Dragon its development plans for new systems will be unaffected and its move into the US will go ahead. But Tony Clarke, it managing director, has stepped down 'for personal reasons' and he will be replaced for the time being by an executive from the electronics giant GEC.

Dragon says its cash-flow problems came as a result of a fall in demand over the summer and the high cost of development of new products. These are the same symptoms that hit Grundy, but the Welsh micro maker expects to end the year in profit and it is dismissing last week's hurried fund-raising as no more than a normal side-effect of expansion in a competitive market.

To back this up it points to new areas of potential sales that it is opening up with new products. The disk drives were officially launched last week, and plenty of new software is on the way. At a date that Dragon will not name it hopes to launch more systems, possibly including a portable.

The £2.5 million package was put together by Prutec, the high-technology arm of the Prudential. Prutec has 42 per cent of Dragon, the Welsh Development Agency 23 per cent, and Mettoy 15.5 per cent - these are the major shareholders. It was Mettoy, the owner of the Dragon until last October, that sparked off the crisis last Friday.

Mettoy issued a statement that talked of a setback at Dragon as its own share price plunged. Before the end of the day the money had been produced and Dragon had issued a statement which described the cash as ensuring "the company's financial stability".

The episode could still prove to have been a storm in a tea-cup. But Dragon may be less ready to issue boastful sales targets - 300,000 by the end of 1983 - in the future, and the Dragon 32 may find itself under pressure in the market before the end of the year.

The price of the machine has already been cut once this year and Dragon claims that its share of the market has been constant. With prices generally still very volatile it may have to be cut again; a spokesman said: "We would be in a position to respond should the need arise."