CSR is a semiconductor maker that designs and manufactures single-chip wireless devices. CSR is the world leader in Bluetooth (BT) semiconductors with a market share estimated to be about 50 per cent. CSR's Bluetooth solutions are used in a wide variety of applications with the bulk finding their way into mobile phones, with wireless headsets as the second-largest application. CSR has also begun to produce solutions for both wi-fi and GPS combination chips, which we believe are set to rapidly increase its attach rates in mobile phones.
CSR's Q3 results were better than we had expected and were at the top end of guidance. CSR has won back an important socket at one of the world's biggest handset makers and in our view market share gains for CSR will continue to drive better results for most of 2010. CSR will finally move to mass production of its modular solution for BT and wi-fi, which is a positive development given the price point for this integrated product is three to four times that of plain Bluetooth.
We believe combo chips are the key to future BT revenues, given the enhanced price point. CSR is expected to release a combined BT/FM/GPS chip towards the middle of 2010 for this to be in production by Q4.
CSR has always been very cash generative and now has nearly $400 million of net cash. On our estimates, we now value CSR at 535p and we believe it will continue to gain market share in its core BT business while facing significant further upside through GPS and wi-fi combination chips.
Investment markets and conditions can change rapidly and as such the views expressed should not be taken as statements of fact nor should reliance be placed on these views when making investment decisions. Past performance is not a guide to the future. RBC Europe makes a market in the securities of CSR and may act as principal with regard to sales or purchases of this security.
Lloyds Banking Group
Broker says SELL
MATRIX commenced initiated coverage of the ten largest European lending banks with a "reduce" recommendation on Lloyds Banking Group.
The broker said: "Lloyds and HSBC's core tier 1 ratios are falling substantially, to 4.4 per cent and 6 per cent respectively. We see other banks as adequate."
Broker says HOLD
CHARLES Stanley has downgraded Begbies Traynor from "add" to "hold" following the Aim-listed accountancy firm's "slightly disappointing" first-half performance.
The broker added: "We expect to reduce our full-year profit before tax forecast by around 10 per cent."