Chips are down for city electronics firm

Published on Monday 27 October 2008 09:20

CHIPMAKER Wolfson Microelectronics said today that sales continue to be hit by "unprecedented uncertainty" surrounding global consumer confidence.

The Edinburgh-based company has seen orders for chips for iPods and satellite navigation systems plummet as consumer spending deteriorates.

It also said that profits and revenues in the third quarter of this year are below last year's levels.

In the three months to the end of September, pre-tax profits fell to 8.3 million, compared to 9.4m in the third quarter of 2007, while revenues dipped from 45.1m to 38.7m.

Analysts have forecast that the company could be sold after its share price plummeted to a record low last week following its warnings of a sales slowdown.

Following today's results announcement, chief executive Dave Shrigley said its revenue performance continues to be in line with guidance, despite "difficult" market conditions.

He said: "In response we are continuing to control costs tightly to mitigate the impact on margins and maintain cash generation.

"With a strong market position, a robust balance sheet and a business strategy aimed at significantly expanding our addressable market, we remain well placed to return to growth when market conditions improve."

He said that the company's performance has been helped by its "wide product portfolio" and increased penetration of the multimedia handset market.

But the Westfield-based company admitted that a main factor for the 14 per cent sales decline was the reduction in sales of chips for portable media players and satellite navigation devices.

Earlier this year, it said that it suffered a blow after a major customer, reported to have been Apple, chose not to use it products for its new media player.

Many chip makers are suffering from a downturn as a result of a supply glut and falling demand for consumer electronic devices.

But the decline has been compensated for by growth in the headset market, where it said revenues have increased by 85 per cent year-on-year.

The firm forecast that quarter four revenues would be 22-29m, with full-year revenues expected to be 127m-133m.