October 27, 2010 / 9:39 AM / 8 years ago

UPDATE 1-CSR misses smartphone surge, shares plunge

* Q3 revenue $222.1 million vs I/B/E/S poll $227.0 mln

* Q3 EPS 19 cents vs I/B/E/S poll 13 cents

* Proposes 4 pence a share final dividend for 2010

* Shares fall as much as 18.4 pct

(Adds CEO comments, analyst reaction, shares)

By Paul Sandle

LONDON, Oct 27 (Reuters) - Chipmaker CSR CSR.L forecast lower fourth-quarter revenue on Wednesday, reflecting a lack of exposure to smartphones and capacity constraints in the manufacture of its GPS chips, sending its shares plunging.

The maker of GPS, bluetooth and wi-fi chips for phones, cars and digital cameras said fourth-quarter revenue would be $170-$185 million, down from $198 million a year ago and at the midpoint 20 percent lower than in the third quarter.

Chief Executive Joep van Beurden said the guidance was below normal seasonal fluctuations — which would usually see fourth-quarter sales down about 10 percent from the previous quarter — for three reasons:

“We are underexposed in smartphones and the smartphone market is growing very rapidly. The economy is certainly less buoyant than it was earlier, and for some of our GPS products capacity is still tight and that’s weighing on Q4 as well.”

CSR’s chips are in Blackberry-maker Research in Motion’s RIM.TO products. They are also in Nokia’s NOK1V.HE handsets, although mainly in feature phones, which have been eclipsed by growth in smartphones.

Its shares fell more than 18 percent to an eight-week low in early trade. They were down 8.8 percent at 314.8 pence at 0932 GMT, the largest faller in a 0.6 percent weaker index of medium-sized British companies .FTMC.

Analysts at Execution Noble said the guidance would likely push down full-year revenue consensus by about 5 percent.

“CSR continues to suffer from issues about supply constraints and lack of a strong product in the smartphone segment, which are unlikely to be resolved in the next six to nine months,” they said.

Van Beurden said CSR was taking steps to increase its offer in smartphones, including a new bluetooth-wifi 40 nanometer combination chip which would be in products in the first quarter of 2012.

For the three months to end-September, CSR posted a 6 percent rise in revenue, undershooting analyst forecasts, although earnings per share of 19 cents beat forecasts after tight costs controls, margin improvement and a low tax rate.

It said it would continue to grow earnings next year, and as a mark of its confidence would begin paying a dividend.

It has proposed a 4 pence a share final dividend for 2010 as two-thirds of a 6 pence notional payout for the year.

Revenue of $222.1 million just missed analysts expectations for $227.0 million, while EPS had been seen at 13 cents, according to a Thomson Reuters I/B/E/S poll of seven brokers. (Editing by Kate Holton and Michael Shields)

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