Wireless chip specialist CSR saw its shares slide throughout a difficult 2011, not least because of the unpopular acquisition of US chip designer, Zoran, as part of a strategic reshuffle.
Investors had baulked at the hefty price tag for the loss-making business, which was reduced after it released a profit warning during the takeover process. Indeed, Zoran lost a further $4.7m (£2.96m) in its first period under CSR's ownership, dragging the overall group business to a fourth-quarter pre-tax loss. But management remains confident that the deal enhances its ability to develop platforms for end-markets in which it has the scale to compete profitably – including automotive, imaging, location and audio, which enjoyed a particularly strong fourth quarter as customers, including Sony and Nokia, launched new products. Platform revenues now account for 56 per cent of revenues, up from 36 per cent a year earlier, which helped lift gross margins to a record 51 per cent.
The recent decision to exit the increasingly commoditised TV business should help enhance profitability further, as will the $130m of annualised cost savings which will have been implemented by the end of the first half.
Broker Numis expects full-year underlying pre-tax profit of $65.3m, giving EPS of 25.1¢ (from $29.9m and 8.6¢ in 2011).
CSR (CSR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 272p | MARKET VALUE: | £546m | |
| TOUCH: | 271-272p | 12-MONTH HIGH: | 420p | LOW: 153p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 437¢* | NET CASH: | $278m† | |
| Year to 30 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2007 | 849 | 156.0 | 86 | nil |
| 2008 | 695 | -6.5 | -5 | nil |
| 2009 | 601 | -14.2 | -7 | nil |
| 2010 | 801 | -5.7 | 9 | 6.5 |
| 2011 | 845 | -51.5 | 19 | 10.3 |
| % change | +5 | - | +111 | +58 |
Ex-div: 9 May Payment: 1 Jun *Includes intangible assets of $460m, or 229¢ a share †Includes treasury deposits and investments £1=$1.59 | ||||
