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

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 ?

Wait for the next big fall before jumping in.

Intel shares rise following Q3 report
By Chris Kraeuter, CBS.MarketWatch.com
Last Update: 5:00 PM ET Oct. 12, 2004

SAN FRANCISCO (CBS.MW) -- Intel reported third-quarter sales near the top of its reduced expectations late Tuesday, but the world's largest chipmaker said fourth-quarter sales could fall below what Wall Street expects.


Shares of the Santa Clara, Calif.-based company (INTC: news, chart, profile) rose 3.7 percent to $21.02 immediately after the results were announced following the closing bell.

Intel's chips go into four of every five computers built around the globe. The company also makes chips used in cell phones and networking gear.

Intel reported third-quarter net income of $1.9 billion, or 30 cents a share, on sales of $8.47 billion. During the same quarter last year, Intel reported net income of $1.7 billion, or 25 cents a share, on sales of $7.8 billion.

Intel's net income included tax-related items that boosted per-share earnings by 3.6 cents. Intel's tax rate for the quarter was 21.4 percent, below the 29.5 percent rate the company detailed during a midquarter update early in September. The tax benefits came from export sales and state tax benefits for divestitures.

Actual gross margin was 55.7 percent compared with the company's expected level of 58 percent and versus the previous quarter's margin of 59.4 percent. The company stated the lower margin was due to higher inventory reserves, increased sales of lower-margin products like chipsets and motherboards, and an inventory writedown.

Analysts had expected earnings of 27 cents a share and sales of $8.44 billion, on average, according to Thomson First Call.

During the previous quarter, Intel earned $1.76 billion, or 27 cents a share, on sales of $8.05 billion.

Intel grew its microprocessor units while its average selling price held flat. Chipset and motherboard shipments increased while flash memory held flat.

Intel kept its 2004 capital expenditure budget steady between $3.6 billion and $4 billion, but the chipmaker trimmed its research and development budget to $4.7 billion from $4.8 billion.

For the fourth quarter, which ends in December, Intel said its sales would be between $8.6 billion and $9.2 billion with margins of around 56 percent.

For the fourth quarter, analysts had expected sales of $9 billion and earnings of 30 cents a share.

Intel Q3 earns 30c, sales $8.47 bln (4:20 PM ET) SAN FRANCISCO (CBS.MW) -- Intel's(INTC: news, chart, profile)third-quarter net income of 30 cents a share and sales of $8.47 billion surpassed Wall Street's reduced financial expectations for earnings of 27 cents a share and sales of $8.44 billion. The chipmaker issued a fourth-quarter sales range of between $8.6 billion and $9.2 billion compared with analyst expectations for sales of $9 billion

12th Oct 04 Panmure Gordon expecta a fall to 85p

If it gets to 85p then I start looking to buy it.

Shares Mag says: Wolfon shares remain hypefilled
even after this weeks plunge and are
susceptible to further disappointments.

Friday Press Roundup
MoneyAM
A summary of today's business comment...

Investors Chronicle

WOLFSON MICROELECTRONICS (buy)


http://www.moneyam.com/action/news/showArticle?id=470457

Equity View: Buy IMI at 355.5p - Great Portland Estates at 297.25p - Wolfson Microelectronics at 100.5p - C&C Group at 17.35 - P&O at 268p (Look who's Trading)

Taking Stock with Edmond Jackson: Follow your own nose to make profits (Wolfson Electronics)

ARM Holdings added 1-3/4 pence to 87 after the UK chip designer posted stronger-than- forecast third-quarter results and repeated its revenue growth guidance for the full year.

IBM rose 3.8% as analysts gave a positive review of its Q3 performance.

In a boost for the battered chip sector, Texas Instruments posted Q3 earnings and sales which handily beat Street estimates. Some analysts noted that its outlook for Q4 sales was guarded at a decline of 6% to a rise of 2%. Others were more positive over the indications of late quarter demand at the company. Texas Instrument shares soared 8% to $22.79.

All positive stuff today and some massive buying along with high volume. Hopefully we should start to see some recovery in WLF.

read this thread got a few pointers

1. down 57% from high
2. profit growth est 50-55% from 79% [imagine the sp without est cockup]
3. fidelity the best special situation fund for years own a massive chunk
4. drop comes in 3's [i'm no chartist but that has happened]
5. good news from intel/ibm
6. pi's rushing back in
7. imho looks good !


cheers d

I'm still not sure about point 4. I hold at an average of 180+ so I have a long way to go to even out. if the saying 'profit warnings come in 3s' is true then there is one more to go !