February 7, 2012 / 7:33 AM / 7 years ago

Wolfson expects another weak quarter before recovery

(Reuters) - British chipmaker Wolfson Microelectronics plc expects another weak quarter before customer additions and product launches boost revenue this year.

Wolfson, whose audio chips are used in Samsung smartphones and Amazon’s Kindle ebook reader, forecast first-quarter revenue below market expectation, but said it was comfortable with current consensus estimates for the full year.

“Our customers are introducing new products during the first quarter and early second quarter. So we are looking for a step up in revenue in the second quarter,” Chief Executive Mike Hickey said on a conference call with reporters.

Hickey also said Wolfson was comfortable with analysts’ estimate of $40 million in second-quarter revenue.

The company said its audio chips are being further adopted by Samsung, LG Electronics, Sony Corp, Amazon Lab 126 and Research In Motion for a range of consumer electronics products which are expected to add “incremental revenue in 2012.”

In November, the company had warned it would not return to profitability till well into 2012 as consumer demand remained weak.

Wolfson has been hit by slower-than-expected product launches at its customers, derailing its long-term recovery plan after being ousted from Apple products in recent years.

The company, whose chips have been designed into many of the smartphones and tablet PCs launched to challenge Apple, said its production numbers were low due as demand remained muted.

CEO Hickey said the mobile and tablet markets, which accounted for 30 percent of Wolfson’s business last year, will account for about half of its 2012 revenue.

Fourth-quarter operating loss widened to $7.2 million from $1 million a year ago. Revenue fell a fifth to $36.9 million.

The Edinburgh-based company — whose chips are also used in handheld gaming consoles, digital cameras and set top boxes — forecast first-quarter revenue between $26 million and $32 million, below $33 million estimated by analysts polled by Thomson Reuters I/B/E/S.

“Although the downgrade cycle seems to be over, this growth and margin outlook probably does not fully justify the strong run in the shares,” analysts at Peel Hunt wrote in a note.

Wolfson shares, which have risen about 45 percent in the last three months, fell 7 percent to 147.75 pence on Tuesday.

Reporting by A. Ananthalakshmi in Bangalore; Editing by Anthony Kurian and Joyjeet Das

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