With its share price falling faster than the pound against the dollar, Acorn battened down the hatches last week and ran for cover. The country's number two micro maker badly needs a confidence booster, but it's hard to see where that might come from.

The confidence of the men who matter in the City of London has been draining away since the turn of the year, when it became apparent that Acorn's Christmas sales had been disappointing.

The city was impressed enough with Acorn in late 1983, when the company issued shares at a price of 120p each. Later the price rose to 193p; last week it fell to 23p at one stage.

In late 1983 the BBC Micro wasn't two years old and the Electron had only just been announced. Acorn's financial results for the year up to July 1983 gave it profits of £8,632,000 on turnover of more than £42 million.

Apparently a reputation for late product launches, delayed development projects, and almost complete deafness didn't trouble the City. Until the middle of 1983 it was close to impossible to get anything out of Acorn - its telephone was perpetually engaged. Its planned expansion of the BBC system proceeded very slowly, and third party suppliers regularly beat it to the punch with BBC add-ons. But the company continued to prosper, thanks largely to the BBC contract.

Then 1984 saw the Electron revealed as inadequate in the face of strong competition. Acorn stayed aloof from the price-cutting fever that swept the home computer business. The fact that the BBC Micro's price was steady looked like a sign of stability and good health at Acorn - but it didn't help sales overseas, and led eventually to the US debacle.

Between January 1983 and December 1984 Acorn flirted with the US market but it made little impression as the battles involving Apple, IBM, Commodore and Atari brushed it aside. A staff of five was left from the peak of 40.

Back home in the same period some traditional Acorn problems - shortages of ROM chips and disk interface components, late arrival of second processors, indecision over pricing - refused to go away. The prospect of a contraction in its education business also loomed. But the company expanded on the home front as well as abroad. It took over a networking company called Torus, and made the first move towards buying Torch. It's "Plan for growth" up to 1990 included a 12 acre expansion of its base at Cherry Hinton, near Cambridge, and the recruitment of 500 extra staff.

As Christmas 1984 approached, Acorn was buoyant. "We did not turn the production tap off over the summer period," said a spokesman, referring to the steps the company had taken to avoid a repetition of the previous year's shortages. It got a shot in the arm at the same time from a well-publicised survey - Acorn systems, the survey showed, were among the most reliable on the market. Since the survey had been carried out on behalf of Acorn's advertising agency it wasn't surprising to find the results presented in pre-Christmas ads, to go with the expensive television advertising campaign. Indirectly this led to the fracas between Sir Clive Sinclair and Chris Curry in a Cambridge wine bar at the end of the year.

Sir Clive stuck the boot in with more effect when he chopped the price of the Spectrum Plus. Acorn responded by lopping £70 off the price of the Electron. As its dealers complained, it trimmed the number of its distributors from 17 to six in the interests of efficiency. Alex Reid, ex-British Telecom, was appointed Chief Executive - perhaps to persuade the City that experienced hands were in control at Acorn. But Reid had no time to make an impact - within days of his appointment, and with the share price tumbling, Acorn dropped its bankers and financial advisors, lost its brokers, saw the Torch deal slip away, and finally asked the Stock Exchange to suspend trading in its shares.

Having chosen to go to the City for funding in 1983, Acorn can only survive on the City's terms. That means restoring confidence - and that means finding a lot of money. Will anybody pass the hat round for a beleagured computer company? If you haven't got a penny, a ha'penny will do...

David Guest