Wolfson

I've seen shares fall on good results before but this is just silly!

Surely this has got to be a buying opportunity!

Financial Highlights

Revenue increased by 94% to $56.9m (H1 2003, $29.3m)
Gross margin improved to 50% (H1 2003, 46.4%)
Profit before tax increased by 123% to $9.3m (H1 2003, $4.2m)
Diluted earnings per share increased 94% to 5.77c (H1 2003: 2.98c)

Operational Highlights

158 design wins in the period
9 new products introduced in the period
Continued strong uptake of products by major OEMs
Increased sales in Japan and Korea to 29% of group turnover
31 new technical and commercial staff

a gap down like this in candle charts is bearish. If you are going to buy then watch for good strong positive volume and preferably a bullish candle. When reading charts it is important to be a detached, unthinking observer

(try printing a chart and turning it upside down if you aren`t sure)

Why buy something that is clearly in downtrend in the hope you have caught the bottom when there is no clear evidence that it has bottomed out.
Wait for it to turn and go into uptrend, on rising volume if you wish.
So you may lose a few points in doing so but you will sleep at night, smug in the knowledge that you are immediately into profit. Bottom fishing is very dangerous. You will lose more than you win.

and the important clue was in the bearish candles at around 220. Prices had tried to go higher but were rejected

I agree with all above. W/s a bit longer until price and volumes are definitely trending.

Yep, all good advice...

Thankfully after a sensible re-think I sold my minor share this morning (when it was 0.3% down), took a minor hit, hopefully this time the lession will stick with me :)

Simon

simonpaynton Annd the rest.

Thanks for a good thread of learning for all on this one.

Very interesting all the way through.

Good luck Si

simonpaynton

A lesson for us both!

Yep, first lesson of shares, dont worry about making mistakes :)

Trouble is I read books, look for good shares, find um, then buy something completely different in a bout of crazy thinking........

Saying that, just to prove I never learn, I sold this share and then purchased TES (when it was up 70%) and its now up to 120%, already got a nice profit..... Still bonkers to buy that, but hey, worked out this time.......

(Watch it fall flat on its face in the morning)

Simon

Sell now then.......

seawallwalker,

I sold yesterday, shortest time I've ever held a share.

Good stuff, but what about simonpayton.

He should too..........

Should what???

I sold WLF first this this morning when it dropped to -0.3%, so I am out....

Simon

Chart looking tasty once again. I'm in for the recovery @ 174 p/s. Am I right to say this is below its floating price?

Correct it is.

It is tempting but it keeps slipping below the 170p mark followed by a 10p rise.

Does not seem to know where it should be yet.

It used to be 320p & then it fell for no good reason & I thought it looked like a bargain but it only recovered a little bit & then it fell again for no good reason & keeps on repeating this & looking like a bargain.

BUT I wasn't tempted until the big fall after the good results BUT it fell yet again so I took a small loss & got out & then it fell even further.

If I knew why WLF was so out of favour then I could decide if it was worth a punt again.

Do you know?

Just before the last results ther was a big rise in the price from 250ish to 290 ish, that was as a result of Instituion Buying.

I can not see why they should have bought and then watched their interests disappear by a 1 loss per share.

None of which adds up.

Crazy!

It seems crazy but there has to be a reason even if that reason is misinformation & inncorrect rumour.

I haven't heard anything.

If had then at least I could disagree with it or agree with it.

The only negagtive I rememeber is the demand in China was expected to decrease. This is significant as over 10% (I Think) profits are from there. Not sure of the detail. DYOR and post ur comments here for everyone to see.

yr Turnover m
2000 8.78
2001 11.12
2002 20.92
2003 42.44

Up yr on year and the price is still slumping I think this one is going to see a good recovery for the next six months. I'm in @174 with a medium/long term view.

Wolfson wobbles on China caution
Published: 11:36 Mon 26 July 2004
By Cliff Feltham, Companies Correspondent

Soaring demand for sophisticated electronic chips needed for MP3 players and other gadgets has created near boom conditions for Wolfson Microelectronics, but the shares are down sharply on concerns about China.

Chief executive David Milne today forecast that the second half would be even better than the first resulting in annual revenue growth of between 70-80%.

But the shares slid 32p to 219p just above last October's float at 210p on Wolfson's caution that demand from Chinese manufacturers of DVDs may not be as strong as expected.

The share price has been as high as 332p. The float was marred by news of a lawsuit from US group Cirrus Logic alleging patent infringement. Wolfson today said it continued to defend the case vigorously. Legal costs amounted to $1.8 million in the first half to the end of June. A similar figure is expected in the second half. The case is due to be heard later this year.

Edinburgh-based Wolfson (WLF) is known as a 'fabless' semiconductor company. It designs chips and sells them to large consumer electronics manufacturers. It does not actually own the huge wafer fabricator plants where the chips are produced. It subcontracts the manufacturing, hence the description 'fabless'.

First half revenues grew by 94% to $56.9 million (32 million) while profits before tax increased 123% to $9.3 million. Margins were an exceptional 50% reflecting the premium prices customers are prepared to pay for high quality chips. The company sees margins continuing in this area for sometime.

Milne told Citywire that the company had surpassed expectations 'on every measure'. Demand has been driven by manufacturers of audio and video systems and portable devices such as MP3 players, multimedia mobile phones, digital cameras and games consoles. This market is expected to double over the next three years.


'These new products based on digital technology require high performance mixed signal interface products such as those produced by Wolfson to allow users access to digital information,' said Milne.


As well as a strong 2004 the company is also anticipating 'high growth' continuing into 2005 underpinned by a healthy order book. But the market was slightly un-nerved by news that demand from Chinese makers of DVDs may not be as strong as anticipated.

Citywire Verdict:
Wolfson is in lift-off at the moment fuelled by the launch of new digital consumer products but at some stage margins are bound to come under pressure as manufacturing capacity out-strips demand. However, today's fall looks an over reaction and in the meantime the shares look good value.