Wolfson chipper as dip ends

WOLFSON Microelectronics is expected to report a solid set of first quarter results this week as it begins what investors hope will be the road to recovery after a difficult 2009.

The Edinburgh-based group, which specialises in designing microchips for consumer electronics, saw revenues fall to 79 million last year after Apple stopped using its products. That led to underlying losses of nearly 5.2m for the year, compared to 15m profit previously.

Although the first quarter is traditionally the weakest for Wolfson – which follows the cycle of increased consumer demand before Christmas – analysts welcome the strategy of chief executive Mike Hickey. He has reduced the number of development projects by about a third, but raised output by broadening the company's product range and increasing focus on timely delivery.

"Based on what a lot of the semiconductor companies have been reporting in both the US and the UK, it should have been a pretty good period for Wolfson," said one analyst.

Gross margins are expected to remain in the region of 50 per cent. For the whole of this year, most analysts expect higher revenues and a return to profits of about 2m to 2.6m before tax. Wolfson remains well capitalised, with 64m in cash at the end of last year.

Shares, which were trading near lows of 70p between October 2008 and March 2009, closed last week at 173.25p.