Wolfson Microelectronics Plc (WLF), a Scottish semiconductor developer, plunged after it forecast fourth-quarter sales that would be less than estimated by analysts, who blamed BlackBerry Ltd. for bringing less business.
BlackBerry, the one-time smartphone leader, probably was the buyer that Wolfson said today had called off new products, according to analysts at Citigroup Inc., Liberum Capital Ltd. and Numis Securities Ltd.
Wolfson shares fell 16 percent to 147 pence in London, the biggest decline since June 2011 and the lowest price since July 30 this year. It was the worst performer in the FTSE All-Share Index, with trading volume 14 times the three-month daily average. The stock has declined 25 percent this year.
Revenue in the final three months of the year will be $40 million to $50 million, the Edinburgh-based company said in a statement today. That compares with the average estimate of $58.3 million, according to three analysts surveyed by Bloomberg and sales of $56 million a year earlier.
The warning that sales would miss estimates is the second time in little more than two months that the company, which doesn’t name customers, has pointed to slower-than-expected orders. Wolfson makes components for smartphones and audio technology for consumer electronic products.
Third-quarter revenue was about $44 million, the company said today. On July 30 it lowered its forecast for the period to $40 million to $50 million, saying its expectations had “moderated” after customers sold fewer products in the first half than anticipated. Sales in the third quarter a year ago were $53.1 million.
BlackBerry reached a tentative agreement on Sept. 23 with its largest investor, Fairfax Financial Holdings Ltd., for a $4.7 billion buyout to take the Canadian company private. It sought offers after a new operating system failed to secure a comeback.
Four days later, BlackBerry Chief Executive Officer Thorsten Heins said he was “very disappointed” in fiscal second-quarter results, which showed sales missing analysts’ estimates by half.
Investors should use any sell-off in Wolfson shares as a buying opportunity as the sales forecast doesn’t materially change Wolfson’s long-term prospects, Eoin Lambe, an analyst at Liberum with a buy rating on the stock, and Nick James, an analyst at Numis with an add recommendation, said in notes to clients. James lowered his earnings estimates for 2013 and 2014.
Sales at its largest customer, which analysts say is Samsung Electronics Co. (005930), accounted for 35 percent of revenue in the third quarter compared with 60 percent in the first half, Wolfson said.
“Although we did expect the contribution of the largest customer to decline in the third quarter, the extent of decline suggests accelerating traction for Wolfson’s products outside Samsung,” Citigroup analyst Amit Harchandani, who has a neutral recommendation, said in a note to clients. It “is therefore encouraging in our view.”
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