FTSE 250 movers: CSR slumps again on sales fears

01.05.2008

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Shares in CSR slumped after the Bluetooth specialist warned that worsening economic conditions are beginning to hit its customers, with demand for headsets and consumer electronics in particular showing signs of softening.

CSR, which designs and manufactures wireless devices said "economic issues are affecting demand for our customers' end products." CSR's customers are responding to slowing demand by reducing inventory levels and shortening order lead times.

However, the company stressed that the handset market remains resilient.

CSR's first quarter sales were in line with expectations, as it maintained its market share despite challenging trading conditions. First quarter sales rose to $160.9m from $160.1m the same quarter in 2007.

"Although forecasting remains difficult, we presently expect that Q2 2008 revenues will be in the range of $175m to $200m," CSR said.

The group sees the longer-term outlook for its markets and for CSR as "highly positive" with a pipeline of new product launches, it added.

The company has made a strategic decision not to enter the broadband market and has thus stopped further development of the UbiNetic protocol stack. As a result of this decision, the company has taken a one-off non-cash impairment charge of $52.9m, reflecting the cost of the UbiNetics business it bought in 2005 and certain assets which will not be used on future development activities.

Micro Focus has made a recommended $7.20 per share cash offer for Nasdaq-listed software provider NetManage.

The deal, which represents a premium of about 73% on NetManage's closing price on 30 April, values the group at approximately $73.3m. The acquisition is believed to be earnings enhancing in the year ended 30 April 2009.

In a separate statement, Micro Focus said it expects full-year revenues to be in the range of $226m to $228m, reflecting a combination of improved operational performance and the positive impact of exchange rate movements.

Underlying organic growth, at constant currency, is expected to be approximately 15%, while EBITDA margin for the year will be slightly higher than that of the prior year.

"We are pleased with the progress achieved in the year across the group and the solid level of organic growth. In particular we are encouraged by the operational outperformance and sustained margin performance in the second half," said chief executive Stephen Kelly.

FTSE 250 - Risers

Micro Focus International Plc (MCRO) 258.75p +10.70%

Galiform (GFRM) 73.00p +6.96%

Rank Group (RNK) 94.00p +5.62%

GKN (GKN) 294.00p +3.16%