CSR soars as Q1 beats market expectations; profits double, outlook strong
Leading Bluetooth technologist CSR plc (CSR.L) saw its share price soar today after it said its revenue and pre-tax profit had both more than doubled in the 1st quarter of 2006.
Releasing performance results for the three months to the end of March, new CEO John Scarisbrick (pictured) said the company "has had a good start to the year. Customer orders have accelerated across all applications since the Chinese New Year and we are benefiting from a robust share of Bluetooth design wins".
CSR is the leading global provider of Bluetooth technology and has developed expertise in Wi-Fi and Ultra Wideband. Its BlueCore technology is in over half of all Bluetooth devices shipped in the world and over 60% of Bluetooth enabled products in devices made by a group of customers that reads like a who's who in consumer electronics.
Mr Scarisbrick said Bluetooth attach rates in mobile phones continue to increase as the demand for hands free calling grows and as mobiles provide additional services. CSR expects the Bluetooth market will now grow at between 60% and 70% in 2006, from the 317 million units shipped last year.
"This buoyant marketplace and our increasing visibility of our customers' development programmes make us confident of delivering a strong financial performance for 2006," he said.
The stock market lapped it up as the results comfortably beat consensus forecasts and it pushed CSR's share price up 207p, or 17%, to 1416p, by midday, taking market capitalisation to £1.7 billion. Not bad for a company valued at £240m when it listed a little over two years ago.
Revenues buoyant
Q1 revenue, earned mainly from shipments of integrated circuits, was $134.9m, 17% lower than the seasonally strong Q4 last year but 103% more than Q1 2005. Revenue shipped to the top five customers represented 62% of the total with the largest customer representing 27% of total revenue.
Profit before tax was $25.8m, 137% more than the $10.9m for Q1 2005.
Operating expenses increased 3% to $39.5m compared to $38.4m in Q4 2005. Research and development spending was $23.0m compared to $20.4m in the last quarter of 2005, an increase of 13%, largely due to headcount growth, which increased to 719 from 688 at the end of Q4 2005, and annual pay rises.
Market growing
Industry wide chip design activity continued to be strong in Q1 2006 with 191 end products and modules qualified compared to 158 in Q1 2005. In particular, the number of mobile phone qualifications has continued to increase with 79 in Q1, 14% more than in Q4 2005.
In the quarter just over, CSR won over 60% of designs for end products or modules in every Bluetooth market segment, winning 121 new designs of which 49% (Q4 2005: 45%) were in the cellular sector (mobile phones and headsets). It was also dominant in stereo headsets, PCs, autos and EDR (enhanced data rate) Bluetooth end products.
The company said design activity is strong for UniFi as customers layout designs using the industry's first single chip IEEE802.11a,b,g embedded solution. The appeal of UniFi's small size, low power, low cost and high performance together with the level of design activity, leads CSR to expect modest revenue from shipments of UniFi in 2006, becoming more significant in 2007.
Outlook
CSR said it has seen acceleration in customer orders across all applications since the Chinese New Year and as a result expects revenues for the current quarter to be between $175m and $185m, 85% to 95% higher than Q2 2005.
2nd May 2006
