But even this will be compensated for by a US market that looks resilient and growth opportunities in the Far East. Pre-exceptional profits of pounds 103.7m were struck on sales 4 per cent ahead at pounds 895m in the six months to June, with all three divisions showing organic sales growth of 7 per cent. John Crane, the mechanical seals business, out-performed some patchy markets, particularly in Europe, and increased market share.The Bundy tubes business benefited from better sales to US car and truck manufacturers, which offset a flat European car market, while the omens look most encouraging in the Dowty Aerospace division which makes propellers and landing gear. With Boeing and Airbus set to almost double their orders in the next four years Dowty will get its share.With pounds 71m net cash, TI needs to make its balance sheet work harder. TI Group has become such a serial out-performer that even a 19 per cent increase in underlying profits in the first half did not budge the share price. That seems a churlish reaction to a company that in 10 years has transformed itself from a Midlands metal basher, with interests spread from Raleigh bicycles to Russell Hobbs kettles, to a global engineer dominant in its main markets. With margins up, cash flow strong and a healthy order book, TI is in an enviable position. The one fly in the ointment is a somewhat gloomy outlook in Europe, particularly in Germany and France Perhaps this is why the shares were unchanged at 525p.

This is a bet on the future and on Psion's ability to capitalise on it. Earnings ratios rarely make a jot of difference in those circumstances.. On forecast profits of pounds 16m this year, the shares trade on a prospective price/earnings ratio of 27.Historically, however, looking at Psion in the short term has been the market's, and our, mistake. But these should not distract from the big picture.Psion's share price has been a massive outperformer since the market cottoned on to the potential at the end of 1992 and it would take a determined optimist to see much short-term value in the shares at yesterday's close of 400p, up 9p.

Progress in the US was a disappointment with profits up only about 13 per cent from a low base, compared with internal projections of nearer 50 per cent. And the collapse of the Amstrad talks has cast doubts over strategy. With a pre-tax return on sales of 15 per cent, gross margins of 41 per cent, a return on equity of 70 per cent and a pounds 12m cash pile, the company is in fine fettle.There are some worries. That is where the value of the company lies - not in what it does, but what it might do in five years time. It is no surprise that mobile phone giants such as Nokia and Ericsson are sniffing around the company.

The marriage of their products and Psion's software is the future of consumer electronics and, having learnt from Apple's mistakes and expressed its willingness to license out its operating system to others, Psion has paved the way for potentially extremely lucrative joint ventures with the industry's giants.In the meantime, profits from the organisers and their industrial spin- offs continue to flow, with pre-exceptional profits up 56 per cent to pounds 8m (pounds 5.1m) on a 35 per cent rise in sales to pounds 53.7m in the six months to June. It is actually a highly skilled writer of software, better placed than anyone to capitalise on the rapid convergence of telecommunications and computing, thanks to its ability to compress powerful applications into pocket-size boxes. The mistake most people make about Psion is to focus on its current product portfolio and think that the company is simply a hardware manufacturer, albeit of a successful fast-growing product, the Series 3A palmtop organiser. The company is aware of the problem and is doing something about it. It still has some of the highest quality assets in the business, but it is by no means clear that the company is changing fast enough.. But the real crunch is in refining and marketing, where against a target of 15 per cent the current actual performance is a return of just 9 per cent. The actual return in the four quarters to June 1996 was just 10.2 per cent That would be bad enough were the target very demanding.