Wolfson Microelectronics, the Scottish maker of chips for the world�s must-have electronic consumer gadgets, yesterday revealed plans to slash jobs.
Wolfson Microelectronics, the Scottish maker of chips for the world's must-have electronic consumer gadgets, yesterday revealed plans to slash jobs and warned that its fortunes were being stymied by a new generation of can't-affords.
"Our ultimate business is determined by how many systems are sold to con- sumers," said Dave Shrigley, chief executive of the Edinburgh-based firm.
"As a result, we plan a review of our non-research and development costs,"
Wolfson's grim news, based on a tough economic climate that has sliced into profitability right across the consumer electronics sector, was yesterday accompanied by a 27% tumble in first-half profits to $9.1m (£4.6m).
First-half revenues grew 12% to $100.3m.
At the same time, CSR, the maker of microchips used in Nokia phones, yesterday also warned it would sell fewer headsets as economy con- tinued to slow and Sony posted a worse-than-expected 47% fall in quarterly profit and cut its outlook.
Canon, another Japanese high-tech giant that competes with Sony in digital cameras, said last week its operating profit fell 12% in the latest quarter, partially the result of weak demand.
"We are at the mercy of the consumer electronics market," said Mark Cubitt, Wolfson's finance director yesterday.
Shrigley said it was impos-sible to tell how long the downturn would last, and described it as "very uncertain".
Wolfson shares, already down around 40% this year, yesterday tumbled 3.7%, or 4.5p, to 117.5p.
Meanwhile, the company said falling demand for consumer electronics would also hit third-quarter sales, and that costs and jobs would have to be cut to combat the downturn - although, the company, which employs most of 370 at its Edinburgh headquarters, declined to be specific about the extent of the job losses.
Shrigley said: "We haven't been quantitative about it, but I sent an email to staff today telling them about the review.
"I can assure you that we won't be cutting any fundamental capability that could affect the long-term future of the company. The plan is actually to preserve the long-term future of the company."
Shrigley said the 180 workers involved in Wolfson's R&D operation would not be included in the business review, which he added would be completed by the end of the company's third quarter.
He added: "Most of the cuts will be achieved through natural attrition and a limited redundancy programme."
Wolfson's chips are best-known for tasks such as converting digital data into analogue signals for speakers.
They are key components of the fast-growing number of portable listening and communications devices, such as Apple iPod music players and multimedia mobile phones.
Wolfson also provides the chips for DVD players, computer game consoles, satellite navigation systems, flat-screen televisions, digital radios, digital set-top boxes and cameras - most of which have been hit by the global economic slowdown Higher fuel and rising raw materials prices have also simultaneously cut into profitability and hampered consumer demand.
This time last year the company had said its order backlog had hit record levels - thanks, in part, to a major supply deal for the much-hyped new Apple iPhone.
Asked if the loss of a key contract earlier this year, thought to have been with Apple for the second-generation iPhone, had added to his bleak predictions, Shrigley said: "We never specify our design wins or losses, but obviously if we had won that contract our business would be that much stronger."
He added: "Things aren't completely bleak. One of big areas of growth is smartphones, and we expect to see continued growth in that area. Our core business is still going strong.
Precipitating the first-half decline was $6.5m in costs relating to the purchase last year of Oligon and Sonaptic.
Sonaptic specialises in microphone technology and has provided Wolfson with a chip that it aims to sell to its mobile-phone customers later this year.
