in inventory following IBM's decision to sell home computers for home use over the Internet.

And BCS also announced it had lost $124,416 for six months ended June 30 before the write-off.

In a statement, the company said it had been undergoing a major re-engineering under the leadership of Wyatt Selyeh, who joined the company on September 1 just as IBM's announcement -- and decision to join forces with Dell Computer -- was made.

That decision would "negatively impact'' BCS's sales, the company said.

"Other changes have been taking place to adapt to the new circumstances in which we now operate and we have reemphasised our commitment to telecommunications which we believe will be the base for computer services in the future,'' the company said.

However, BCS subsidiary BCS Agencies Ltd. reported earnings of $208,000 in the first six months of the year.

"It is still a vital part of our operations quite apart from our activities as agent for IBM hardware, it provides us with access to IBM's worldwide software services,'' the company said.

In addition, the company's communications business earned $14,300 and is expected to grow, the company said.

For the year ended December 1, 1998, BCS earned $987,946.

The Computer Centre contributed $642,190 in earnings and BCS Agencies earned $572,337.

The communications division contributed $72,072 for the year.