Wolfson Micro hit as customers lose out to Apple

Wolfson Micro hit as customers lose out to Apple

London: Edinburgh-based chipmaker Wolfson Microelectronics slashed its sales forecast again on Monday in the face of a tough market for electronics goods that lack an Apple logo.

The downgrade, its second in a month, sent shares in the maker of audio processing chips down 15% to a 15-month low 148 pence.

“The company is increasingly cautious about the challenging near-term consumer electronics environment," chief executive Mike Hickey said in a call with reporters.

“Since the trading update on 27 June there has been a sharp reduction across a wide base of customers in their near-term forecasts."

The Edinburgh-based company said on Monday its full-year revenue would grow by less than 10%, missing analyst expectations which had already been downgraded to about 13%, according to a Thomson Reuters I/B/E/S consensus.

Wolfson, which supplies Blackberry-maker Research in Motion , Samsung and LG, said it was being hit by slower-than-expected launches of products such as tablet computers, derailing its long-term recovery plan after being ousted from Apple products in recent years.

Its chips have been designed into many of the smartphones and tablet PCs launched to challenge Apple, but Hickey said production numbers were low due to muted demand from consumers.

“[Wolfson’s customers] are making sure their products are right before they launch them," he said. “There are category factors in there as well."

Analysts at Espirito Santo Investment Bank said that while the group’s second-quarter results were in line, the outlook was disappointing.

“The second profit warning in a month clearly illustrates limited visibility, and the challenges Wolfson is facing in translating design wins into revenue," they said.

The company reported second-quarter revenue of $38.6 million, up 7% on the same period a year ago but missing analyst forecasts of $41 million. Underlying operating losses widened to $2.9 million from $1.3 million a year ago.

It said its third-quarter revenue would be in the range of $37 million to $44 million, sharply below consensus of $51 million, according to a Thomson Reuters I/B/E/S poll of five brokers.

The group will cut spending by about $6 million a year, at a one-off cost $3.5 million, by reducing research on replacements for some older products not related to its main audio range, Hickey said.