Wolfson's shares actually perked up as it issued first-quarter guidance just below expectations. The audio chip specialist's shares have halved from their 12-month high on , particularly after July's acquisition of Sonaptic, while rising gold prices also hit margins.
Trying to balance expectations, chief executive David Shrigley says he "wouldn't be terribly alarmed" with analysts' consensus expectations of 11 per cent revenue growth, but will not commit to double-digit growth in 2008.
Instead, Mr Shrigley's pitch is that Wolfson's potential market will have tripled by 2011, thanks to a more diversified product set. The impact of Wolfson's new 'AudioPlus' products - which include improved power management, microphones and noise cancellation - will largely be felt in the second half of 2008. Winning a new mobile handset customer could win back investors fretting about increasing competition, too. They may also be relieved that no immediate acquisitions are planned. Diversification is all the more urgent as sales of media-player chips - including those to Wolfson's flagship customer, Apple's iPod - were flat in the fourth quarter, compared to 2006.
Cazenove expects adjusted EPS of 31c in 2008 and 37c in 2009 (28c in 2007).
Wolfson Microelectronics (WLF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 160p | MARKET VALUE: | £ 189.2m | |
| TOUCH: | 160-161p | 12-MONTH HIGH: | 325p | LOW: 151p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 13 | |
| NET ASSET VALUE: | 74p* | NET CASH: | $90m | |
| Year to 30 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2003 | 76.0 | 12.5 | 12.0 | nil |
| 2004 | 119 | 15.1 | 9.90 | nil |
| 2005 | 167 | 38.7 | 26.3 | nil |
| 2006 | 204 | 44.6 | 27.7 | nil |
| 2007 | 232 | 40.8 | 25.1 | nil |
| % change | +14 | -9 | -9 | - |
*includes intangible assets of $46.0m or 20p per share £1=$1.98 Payment: - Ex-Div: - | ||||
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