Apple blow hits Wolfson's figures

Published on Monday 5 October 2009 21:31

WOLFSON Microelectronics continues to be bitten by the loss of business from technology giant Apple, warning yesterday that third-quarter results will be below expectations.

Once the Edinburgh company's largest customer, Apple has designed Wolfson's audio components out of some of its leading products. While the Scots firm still supplies the older Apple 3G iPhone, its component is missing from the latest version of the best-selling handset.

Apple plans to continue launching the older version into a number of countries, including China, but, hit by component shortages in recent months, it is currently focusing production on its latest edition.

The decision means Wolfson's third-quarter revenue will be lower than expected at some $35 million (22m), a 42 per cent fall on the same time last year, and $4m below forecasts. Shares in Wolfson dropped 9 per cent on the news, the latest in a string of revenue warnings from a former stock market darling.

Wolfson's statement to the London Stock Exchange yesterday pointed blame for the revenue miss on analysts who ignored guidance given by directors, assuming sales would be stronger.

In July, finance director Mark Cubitt said he expected third-quarter sales would grow less than in previous years, probably less than 10 per cent over the second quarter. Yesterday Wolfson said its results would be "consistent with the level implied ... at the time of the half-year results".

Shortly after Wolfson's interim results, rival CSR made bullish comments about sales, prompting several analysts to upgrade forecasts on Wolfson.

The company was not scheduled to give yesterday's update.

After being fined by the Financial Services Authority over withholding market sensitive information last year – it did not immediately announce that it had lost a major piece of business from Apple – Wolfson is likely to be highly sensitive to any suggestion that it might mislead the market again. News on its current sales overshadowed a piece of good news for Wolfson, which is understood to have its first contract with Nokia, the world's largest mobile phone company. Wolfson's audio chip is thought to have been designed into the Nokia Twist, a new handset which will only be sold in the US.

While the new Nokia is not expected to be a major seller, the contract is an important milestone for Wolfson, after years of failing to grab the attention of the Finnish company.

Mike Hickey, who became Wolfson chief executive at the start of the year, has said he wants to make the business more design focused, promising to release twice as many new products this year than in 2008.

The group, whose digital to analogue converters are used by some of the world's leading audio brands, said it had been designed into several "significant" new products with multiple customers, leading the firm to give a strong outlook for next year.