About a year ago Core Pacific-Yamaichi maintained its 'hold'' recommendation on the stock of red chip Founder Holdings, a software-development and systems integrator for the publishing, banking and retail industries and distributor of computers in the mainland. Founder had just announced a reduction in its loss for the first half of 2002 to HK$54.5 million, down from a loss of $120 million in the same period of 2001. Core Pacific said that despite a gradual recovery and big cut in staff the improvement appeared to come only from its non-media section, while the media sector deteriorated slightly. Founder supplies Chinese software to more than 90 per cent of newspapers in the mainland. Core Pacific also had concerns about the high level of lay-off compensation. 'We tend to remain cautious about an immediate turnaround as the company experienced severe losses last year,'' it said. In April Founder said its net loss narrowed by 28.5 per cent last year to $274.49 million. It shed 552 workers, taking its headcount to 1,968 by the end of the year. Cost-cutting boosted Founder's gross profit margin to 17.9 per cent, up from 5.2 per cent in 2001. Over the past two years the company has lost a total of $658.45 million. Founder's shares finished at a year low of 50 cents on April 24. On Friday the counter closed at 94 cents.