CSR says tough economy hitting end markets; plans to cut costs by $20m
Bluetooth specialist CSR plc said 3Q revenues were up 9% to $205.5m over 2Q but were down $34.6m from 3Q07 as the "difficult economic environment" hit customer end markets.
It expects to cut combined R&D, sales, general and administration expenses in 2009 by around $20m in response to the tougher market conditions.
Year on year 3Q net profit was down 42% to $23.7m, as the global slowdown bit into demand.
CEO Joep van Beurden said: "Our exclusive focus on the Connectivity Centre is serving us well, and the growth opportunity it provides is compelling. We are also seeing widening demand for our products in non-cellular applications, such as gaming and audio, which provides us with encouragement about the diversity of future potential demand.
"We are aligning our business and cost base with the changed economic conditions while reinforcing our ability to develop and deliver innovative new products, grow market share and capitalise on the future growth opportunities available to us," he said.
"We are accelerating completion of an operational assessment we undertook earlier this year and we have identified significant further efficiencies we can secure alongside an expected reduction in headcount."
The market responded well to the news bidding its share price up around 10% over two days, taking market capitalisation to around £255m.
The Cambridge-based company said itss major Connectivity Centre product, BlueCore7, was on track. It was launched earlier this year and integrates classic Bluetooth with Bluetooth low energy, FM transmit and receive and CSR's own eGPS navigation technology. CSR is confident that BlueCore7 will appeal to key Tier 1 handset manufacturers and will begin shipping in the first half of 2009.
The development of MusiCore, CSR's chip that enables music phones with 100 hours of high quality music playback, plus Bluetooth functionality, has progressed according to plan. The company is developing MusiCore to a tight schedule and expects the product will win design slots with Tier 1 manufacturers during the first half of 2009.
UniFi, CSR's market leading embedded Wi-Fi technology with extremely low power consumption and industry leading coexistence, has been designed into more than six handsets, with additional design wins with Tier 1 manufacturers in the pipeline. CSR's next generation Wi-Fi product is on track to sample to customers during 4Q.
The headset market continues to be strong for CSR, the company said, due to its technological superiority and innovation. CSR estimates its market share to be around 80%. Its products are particularly strong in high-end headsets where customers demand the high quality product with the greatest range of features for their devices. CSR wins almost all designs in this segment. CSR has created BlueVox2 and BlueVox DSP solutions specifically to ensure it continues to compete effectively in the lower cost Bluetooth headset market.
CSR is the market leader for providing Bluetooth solutions to the automotive market, which has seen good growth as attach rates continue to increase. Despite the expected slowing in global demand for new cars, the company expects the Bluetooth market to increase significantly next year, with a greater percentage of cars sold including Bluetooth kits, as manufacturers seek to offer higher specification levels.
