Wolfson cuts jobs
LONDON, July 29 (Reuters) – Scottish chipmaker Wolfson Microelectronics Plc said falling demand for consumer electronics would hit third quarter sales, and that costs and jobs would be cut to fight the downturn.
The company, which makes chips for products including Apple Inc’s iPhone, said third quarter revenue would come in at a lower-than-expected $56 million to $62 million, a cautious guidance based on the weaker economic climate.
Chief Executive Dave Shrigley told Reuters the global economic downturn was hurting demand for electronic devices, and that the group’s non-research and development cost base would be slashed as a result.
“Our ultimate business is determined by how many systems are sold to consumers. As a result we plan a review of non-R&D costs,” he said in a telephone interview, adding that there would be a limited redundancy programme.
Wolfson employs about 370 staff, mostly at its Edinburgh headquarters. Shrigley said the plans to cut headcount would be announced to employees on Tuesday.
The company’s shares, already down 40 percent this year despite a recovery since March, shed another 7 percent to 113.5 pence by 0756 GMT, valuing the company at 134 million pounds ($266.3 million).
Landsbanki analyst Dan Ridsdale said in a note that “guidance is significantly lower than we were expecting,” adding that full year forecasts were also likely to come down.
Shrigley said it was impossible to tell how long the downturn would last, describing it as “very uncertain”.
Finance Director Mark Cubitt said customers were being cautious on orders from the company so as not to build up an unwanted inventory. “We are at the mercy of the consumer electronics market,” he said.
Better news for shareholders came in the confirmation of a share buy-back programme. Wolfson is planning to purchase about 10 percent of its shares for $25 million, using some of its $85 million cash-pile.
Shrigley also said the group’s attempt to expand into new products outside the audio market was on track, and that it was well placed to benefit at the end of the downturn.
First-half revenue grew 12 percent to $100.3 million, while adjusted operating profit was flat at $10.4 million.