Investors yesterday obliterated a quarter of the stock market worth of Wolfson Microelectronics after the Scottish maker of chips for many of the world's must-have electronic gadgets reported a sharp decline in orders on the back of increasingly weak consumer demand.
Investors yesterday obliterated a quarter of the stock market worth of Wolfson Microelectronics after the Scottish maker of chips for many of the world's must-have electronic gadgets reported a sharp decline in orders on the back of increasingly weak consumer demand.
In a trading update, the Edinburgh-based company forecast revenues for the fourth quarter at between $45m and $50m, compared with the market predictions of around $60m.
The news marks a downbeat end to the tenure of Dave Shrigley, who is stepping down as chief executive at the end of the year to return to the US for family reasons.
Shares in the group yesterday plunged 24.9%, or 27.25p, to 82.25p - well below a peak of around 565p hit in mid 2006 and its lowest point since flotation in 2003 - wiping some £32.2m off the former tech darling's market capitalisation and valuing it at around £97.3m.
The grim forecast at Wolfson, which makes chips for products including the Apple iPhone, is set against a tough economic climate that has sliced into profitability right across the consumer electronics sector.
In July, the company warned that falling demand for consumer electronics would hit sales, and that costs and jobs would have to be cut to combat the downturn - although the company, which employs most of its 370 staff at its Edinburgh headquarters, has declined to be specific about the extent of the job losses.
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 said its order backlog had hit record levels - thanks, in part, to a major supply deal for the much-hyped Apple iPhone.
However, the loss of a key contract this year, thought to have been with Apple for the next-generation iPod, added insult to injury in the harsh economic landscape.
The company yesterday blamed its woes on a "material reduction in order intake in recent days" and a deferral of orders across a range of applications.
"This reduction from earlier expectations is the result of the general economic environment and not reflective of any material design loss," Wolfson said in a statement.
Meanwhile, the company yesterday said it expected its third quarter - traditionally a strong period because electronics manufacturers gear up for Christmas - would be in line with previous guidance of between $56m and $62m, with gross margins steady at between 50% and 51%.
At the same time yesterday, Landsbanki cut its full-year sales estimate for Wolfson to $207m from $219m.
