TTP profits warning sends shares tumbling

TTP Communications, which provides technology for mobile phones, said yesterday it would post a loss of £5.5m in the first half of the year after the Sars virus grounded its sales team.

The news at one point drove down TTP's share price by 31 per cent to 58.5p, before closing at 70p, down 14.5p. TTP, which supplies chips and phone designs for Siemens, Sharp and Samsung, had warned in April that it was struggling to meet its Asian customers and close deals during the Sars outbreak. It generates 55 per cent of its revenues in South-east Asia.

"Sars has had a significant impact on our business. We did put contingency plans in place to cover for our inability to travel in the region ... but sales were lower in the first quarter," said Tony Milbourn, chief executive of TTP, yesterday. "The market has remained tough and we know now that the improvements in the second quarter are not going to offset what happened in the first three months of the year."

The £5.5m loss compares with a pre-tax profit of £3m in the same period last year. At an operating level, Mr Milbourn said TTP would make a £3.5m loss compared to a £5m profit in the same period last year.

His outlook for the next half of the year was more optimistic. The company expects to have its technology in up to 25 million handsets this year, compared to 10 million last year.

But the appetite for 3G phones is still slow, which is causing delays in signing off deals with manufacturers for its designs. "The technology is there, but our customers are thinking very carefully about what the end demand will be ... Development costs are high," Mr Milbourn yesterday said.

TTP also said its subsidiary, TTPCom, had spent up to £950,000 to acquire 43 per cent of Synergenix Interactive, which supplies games technology to mobile phone manufacturers.