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

Balance sheet as at 30th June looks very clean, modest stocks and substantial net cash. Prospects remain satisfactory, even if well below earlier expectations. I think the fall overdone, but only committed to 2500 shares at 102p, with stop loss at 80p, just in case this warning is not the first.

Re the above post - should have referred to this warning not being the last - even an old codger like me can tell it is the first!

partridge

Make sure you stick to your stop loss.

The fall was overdone when it fell in July but it went on & on falling.

There must be some shorting going on.

Plus the semiconductor matket is heading for downturn.

partridge, same here bought some more @ 102.5

shares plunge on sales warning
LONDON (Reuters) - Wolfson Microelectronics (LSE: WLF.L - news) has lost over a third of its market value after it scaled down its guidance for second-half revenues, blaming slowing demand in some key markets.

Shares in the firm were 30 percent lower at 115 pence by 8:35 a.m. on Monday, off early lows of 105p, after the supplier of parts used in DVD players and cameras said it now expected second-half sales to come in at between $56 million and $60 million (31 million and 33 million pounds).

In July, Wolfson had reported 94 percent growth in first-half revenues to $56.9 million and forecast even greater revenue growth in the second half.

"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," Chief Executive David Milne said in a statement.

"Although this is extremely disappointing, Wolfson will still deliver substantial growth in 2004."

Wolfson's second-half guidance will put it on course to achieve 2004 revenues of between $113 million to $117 million, up between 50 and 55 percent on a year earlier.

Analysts had pencilled in 2004 revenues of $134 million, according to a consensus forecast from Reuters Estimates.

The Scotland-based company, which listed on the London market last year, said that while trading was broadly in line with expectations until recently, order intake levels had since suffered.

In the DVD market, an acceleration in orders usually seen at this time of the year was not taking place due to a build-up of surplus inventories at manufacturers, causing some customers to cancel orders and delay placing new orders.

Market purchases of multimedia mobile phones were also slower than expected, causing some customers to scale down their orders, Wolfson said.

However, the company said it continued to experience strong growth in portable products such as music players and forecast sales in this segment would more than double in 2004, making it the largest contributor for Wolfson.

Monday's warning caused Wolfson's market value to fall to around 116 million pounds

Milne added it was still seeing to experience strong growth in portable products such as music players and forecast sales in this segment would more than double in 2004.


http://uk.biz.yahoo.com/041011/214/f4b8d.html

Citigroup Smith Barney reiterates buy Wolfson Microelectronics (LSE: WLF.L - news).

http://uk.biz.yahoo.com/041011/336/f4bbo.html

azhar

Like I said in July, this fall is just silly but then it just goes on getting sillier.

I'm still staying out of this 1 until after the next big fall.

These things tend to happen in threes, don't know why.

Good call apple i.e. wanting to stay out.I'm in and staying in for the next 4/6 months as stated previously.

guys if you are investing for the medium term then WLF could be a great investment.

I understand from a friend that they are well positioned for the big change in DVD technology which is coming next year with the introduction of Blu-ray. This change will require significant changes to DVD equipment & could well play into their hands. I would expect to see them sign up some more major players in the coming months.

Whooa! Sure some people want to have the latest kit, but the vast majority are quite happy with players and things that fit in your ears. That sadly is the bulk of the market and provided the darn thing works then they are unlikely to buy again, just because it's blue.
My understanding is that the shorter wavelength of blue light means more data can be squeezed onto a disc - good news if you want to offer extra features to a film - interviews, discarded scenes etc.
However, I doubt there will be a surge in demand - much like the damp-squib effect of new phones (with cameras) - a great idea if you don't have a phone, but not sufficient to make you ditch the old one. For a technology to be a "must have\" it needs to offer a step-funtion of Improvments; neither DVD's or Phones have this, IMHO. I don't yet hold these. Maybe if the price came down to give a distinct buffer-zone should another PW come along -(yes they do come in 3's = one more to go.)
Regards

Wolfson not so fab as China problems escalate
Published: 13:12 Mon 11 Oct 2004
By Douglas Bence, Companies Correspondent
Email to a friend | Printable Version

'Fabless' semiconductor company Wolfson Microelectronics sees more than 50 million of its market value wiped away as investors run scared of its latest warning.

Sales of DVD players and multi-media mobile phones have dried up in the Far East, forcing the company to reduce its anticipated sales forecast for the second half of the year from between $113-117 million to $56-60 million. Gross margins remain between 49-51%.


After the downgrade Wolfson expects revenue growth between 50-55%. This compares with expectations of 70%-80% growth at its interims in July when the Edinburgh-based company first cautioned about the weak demand from Chinese manufacturers.


Shares in the company (WLF), which unfortunately Citywire tipped after their listing a year ago, crashed 62.5p to 101.5p, a fall of 38%.


Formed in 1984 by David Milne and Jim Reid, Wolfson supplies mixed signal semiconductors for the digital consumer electronics market. It is known as a 'fabless' semiconductor company because it designs chips and but subcontracts the manufacturing to partners in the United States, Asia Pacific and continental Europe.


Trading was in line with expectations until recently, but a slow down in the sales of the end products in the Far East led to orders being cancelled or delayed.


The biggest contribution to revenue comes from the sale of chips for MP3 players and Palm products which are still expected to double this year. Trading in the imaging product sector is in line with expectations.


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, said chief executive David Milne. Although this is extremely disappointing, we will still deliver substantial growth in 2004.'


New customers in Japan and the US for new digital consumer products will allow the company to grow next year, he added.

2004 Citywire

Stay out if you can ufn.

hangon,

Blu-ray is a step change, 4.7Gb to around 30Gb which is eagerly awaited by PC users, they want bigger DVD writers.

BUT that's not the point, I doubt if WLF will get much of the market for the chips to control those drives. Those chips are normally designed by the drive manufacturers themselves.

The price of WLF just gets sillier, such is the reaction to management overestimates even though WLF is doing fine & has what looks to be a very good future.
Stay away from WLF, until after the 3rd big fall.

Mixed messages on this stock guys.

Times says avoid, Merrill Lynch upgrades hold to buy, Citigroup say hold from buy!!

http://jump.digitallook.com/?type=art&eai=27557988&username=1034164&ac=207859

http://www.portal.telegraph.co.uk/money/main.jhtml?xml=/money/2004/10/12/cxquest12.xml#2

http://jump.digitallook.com/?type=art&eai=27557833&username=1034164&ac=207859

http://jump.digitallook.com/?type=art&eai=27557845&username=1034164&ac=207859

Times October 12, 2004

Tempus

Wolfson Microelectronics

INVESTING in technology shares is not for the faint-hearted. Another painful demonstration was provided by Wolfson Microelectronics, which makes silicon chips used in consumer electronics. The sale of DVD players has failed to take off, as Christmas beckons. In addition, consumers have also been slack in buying Wolfson-powered high-end multimedia mobile phones. As a result the company blew its forecasts.

Wolfson said that its revenues in the crucial second half will be between $56 million (31 million) and $60 million way below the $79 million that the house broker, Citigroup, had pencilled in. Not surprisingly, investors panicked at the width of the miss, and the shares fell 38 per cent.

In some ways the judgment is harsh. After all, Wolfson is growing fast. If the second half meets the revised target, then sales will be up by about 50 per cent on lastyear. Margins too have held up. But none of this matters if the company cannot meet the exalted expectations.

The temptation at this stage is to conclude that the shares may now be cheap. This is usually a mistake because profit warnings usually do not come alone. Indeed, Wolfson gave investors a hint of the problems in July, saying that demand from Chinese DVD makers had begun to wane. At that time, the company blamed a glut in the market, and added that there was no build-up in inventories. Now it turns out that inventories unsold stocks are on the rise. That should set alarm bells ringing: it may be some time before Wolfson sees real stability. AVOID.

Times October 12, 2004

Wolfson warning sends rival CSR down
By Nick Hasell
Smaller capitalisation shares

A REVENUE warning from Wolfson Electronics left its larger semiconductor rival CSR with the biggest fall in the FTSE 250.

Followers of CSR, floated at 200p in February, have been seeking clues to the strength of demand for microproccessors ahead of the companys third-quarter results on November 9.

Yesterdays update by Wolfson, off 62p at 101p, only served to confirm the recent gloom of US chipmakers. Wolfson, whose semiconductors go in DVD players and cameras, said it had seen little sign of the traditional pre-Christmas surge in demand, and revised its full-year revenue guidance down to 113 million, from $117 million, against a consensus $134 million previously. CSR, which, as a developer of Bluetooth applications, is also exposed to consumer electronics demand, fell 17p to 349p, while TTP Communications, the wireless technology specialist, lost 4p at 51p. The FTSE 250 fell by 7.5 points to 6,372.0.

They are now forecasting GROWTH of 50-55%..........how bad is that ?