Group Sense's profit for the year to March 31 has dropped 16.7 per cent from a year earlier to HK$41.98 million, as electronic component shortages caused delays in distribution and an increase in material costs. Turnover for the maker of palm-sized electronic devices grew 25 per cent to HK$1.4 billion. A worldwide shortage of electronic components - in particular microprocessors, memory chips and LCD drivers - caused the launch of two Chinese language-based personal digital assistants (PDAs) to be postponed by almost six months. To secure stable supplies, the company said it had developed strategic alliances with suppliers in South Korea, Japan and Taiwan. Basic earnings per share was 4.1 HK cents, down from five cents in the previous year. The board proposed a final dividend of 0.5 cent per share. With a view to expanding into the US, Group Sense has struck a tie-up with New York-listed Franklin Electronic Publishers, which specialises in electronic dictionaries and other e-books. Group Sense has agreed to exchange 60 million new shares at HK$1.20 per share for 1.02 million new shares in Franklin, priced at US$9.065 each. The deal would give Group Sense a 4.8 per cent stake in Franklin. In turn, Franklin will have a 11.4 per cent stake in Group Sense. Chairman and chief executive Samson Tam Wai-ho said the partners would co-operate in marketing, branding and research and development. 'It's a perfect fit,' Mr Tam said. '[Group Sense's] expertise in speech technology applications and wireless hand-held devices . . . complements Franklin's core strengths in integrated CPU architecture and data compression.' The alliance is planning to establish a research and development facility in either Guangzhou or Shenzhen, which will employ 50 to 100 engineers. Mr Tam said Group Sense would focus on making PDAs and Internet-enabled handheld devices. The company sells 30,000 PDAs monthly, and is targeting sales of 500,000 for the year.