Wolfson drops to fresh low after warning on revenues

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The Independent Online

The Technology company Wolfson Microelectronics lost more than one-third of its market value yesterday after it cut its revenue forecast for the full year. The shares plummeted to the lowest since the company was floated in October last year.

The Edinburgh-based company said that while trading had broadly been in line with its expectations until recently, order intake levels have since suffered. Like other semiconductor companies, Wolfson said it is experiencing a slowdown in some of its end markets. Orders for parts in consumer audio goods, in particular DVD players, are not picking up as usual at this time of the year.

The company blamed this on a build-up of stocks at manufacturers, causing some customers to cancel orders and delays in placing new orders. The uptake of multimedia mobile phones has also been slower than expected, causing some customers to reduce orders.

Wolfson now expects revenues in the second half to be in the range of $56m to $60m, equating to full-year sales of $113m to $117m, up 50 to 55 per cent from last year. Analysts had pencilled in 2004 revenues of $134m. In July, the company had reported 94 per cent growth in first-half revenues to $56.9m and forecast growth of 70 to 80 per cent for the second half.

David Milne, the chief executive, said: "We are revising our guidance for the second half because of a lack of the typical pre-Christmas surge in demand for some of our products."

However, Wolfson said it is still seeing strong growth in portable products, with sales in this segment expected to more than double in 2004 from last year, making it the largest contributor to the company. Gross margins continue to be in line with the company's previous forecast of 49 to 51 per cent. It is continuing to expand its customer base, particularly in Japan and the US. Wolfson has also expanded its portfolio with new products for the latest digital consumer applications.

Yesterday's warning on revenues caused Wolfson shares to close down 62.75p at 101.75p, giving it a market value of £109.5m.