for the year to October 31, a 35 percent drop from its 1993 profit.

In a just released report to shareholders, president Mr. Donald Lines and general manager, Mr. Walter Ingham, blamed changes in the computer industry for the decline.

The company is involved in various aspects of the computer business, principally the sale of computers, peripheral equipment and software The report highlighted the technological advances that are "forcing major players in our field to adjust and accept reductions in margins''.

It was noted that a system that needed an entire computer room to house it three years ago can now be replaced by a smaller, more powerful system that can sit under an office desk.

The report said: "We believe our performance last year was also impaired by customers' perceptions of IBM as the leader in the industry -- particularly following its unprecedented losses. IBM has struggled to adjust to changes in the computer industry in recent years but has now once again become a dominant force.

"The technology platforms which IBM has backed (e.g. PowerPC) are also poised for major success, and renewed confidence in IBM will ultimately reflect in our success at BCS.'' The report also said: "The decline in earnings reflects the changes which have taken place in the computer marketplace, where all vendors are now forced to focus on business needs and professional services as an alternative to simply generating hardware sales.'' The company lists assets of $1,990,413 compared to $2,602,955 a year ago.

Liabilities are $403,789 compared to $825,523 for the previous period.

Operating income dropped almost 30 percent from $6,167,177 (1993) to $4,332,471 (1994), while operating expenses decreased from $4,512,584 to $2,845,934, almost 37 percent.

Earnings per share were $1.16, compared to 1993's $1.78. Some $540,000 was paid out in dividends for 1994, compared with $240,000 the year before. Cash dividends were declared and paid quarterly at $0.20 per share. A special dividend of $1.00 a share was declared and paid to shareholders of record at June 22,1994.

The company wrote off inventory valued at $41,000 because of the rapid rate of obsolescence in technology and continuing price reductions, now considered to be a feature of the industry.

But there is optimism for more encouraging results this year after the IBM introduction of new computer products, and a BCS emphasis on professional services to support systems and consulting on total solutions.

The firm's retail outlet, The Computer Centre, recorded decreased sales because of one large single sale in 1993, but reports a period of solid growth.

BCS said: "There continues to be increasing pressure on margins on PC sales.

The aggressive pricing and increasing number of IBM clones available in Bermuda has forced us to lower our own prices to remain competitive.

"We have, therefore, had to strive continuously to find and offer to customers new products and better services while remaining competitive by reducing costs and increasing efficiency.

"1994 also saw a big turn around in the IBM company. An `outsider' was brought in as chief executive officer and the changes that he has made in IBM have started to bear fruit.''