Computer chip designer Wolfson is set for a strong second half to the year on the back of insatiable demand for state-of-the-art hand held communication and entertainment gizmos.
Revenue in the first quarter of 2012 tumbled to $30.3m from $41.1m in the first quarter of last year, in line with company guidance.
The fall in revenue contributed to a widening of the underlying operating loss to $6.4m from a loss of $0.9m a year earlier. Loss before tax thickened to $8.2m from $4.5m., but the company enjoyed a net in-flow from operating activities of $2.7m, compared to an outflow in the corresponding quarter of 2011. Cash and short term deposits at the end of March were unchanged from the end-2011 figure of $53.5m. The group has no debt.
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Second quarter revenues are expected to be in the range of $36m - $42m. The sequential revenue growth is expected to be driven by new and existing smartphone and tablet computer customers ramping up production levels.
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Over the reporting period the group was called in by device manufacturers to contribute its technology to around 70 new designs; what the group calls "design-in" contracts. This resulted in the design-in value based on estimated two-year revenues rising to a record level.
"The underlying fundamentals of the business have continued to improve as consumers demand better audio from their electronics products, such as smartphones, tablet computers and gaming devices. This is driving some quite disruptive technology trends that favour Wolfson products - resulting in a record design-in performance in the first quarter," said Wolfson Chief Executive Officer, Mike Hickey.
Gross margin in the second quarter is expected to be around 48% - 49%, depending on the product mix, versus 49% in the first quarter. As previously reported, as 2012 progresses and as design-ins translate into volume production, the company expects a step up in revenues and a return to sustainable growth and underlying profitability.
The company said it remains comfortable with current market consensus for the full year. The current consensus forecast is for full year revenue of $110.4m and profit before tax of $1.0m, a far cry from the days of $40m profits seen back in 2007.
The market liked the upbeat tone of the statement and chased the shares up to 206p, before profit-taking set in, pushing the shares down to 203.75p, up 19.5p on the day.
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