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Ubinetics acquisition charges hurt CSR shares

Posted: 05 May 2008 ?? ?Print Version ?Bookmark and Share

Keywords:wireless chip? CSR shares? Ubinetics acquisition?

Shares in CSR plc dipped by as much as 25 percent in early trading as the company announced it had taken a charge of $52.9 million for the acquisition in 2005 of Ubinetics. The wireless chip specialist also saw a fall off in demand for its chips, mainly Bluetooth parts, from makers of mobile phone makers and other consumer electronics devices, notably headsets.

CSR reported Q1 loss of $41.9 million compared with a profit of $3.3 million for the same period last year. Sales during the quarter ended March 30 rose less than 1 percent to $160.9 million. CSR said Q2 revenue will be $175 million to $200 million, again a weaker than expected outlook.

The company admitted the market has moved on since it bought the Ubinetics software businesswhich specialized in protocol stacks for mobile phone developmentin August 2005. The company said the market is crowded and mature and does not offer sufficient growth opportunities.

In a statement, CSR said, "In the three years following the acquisition, the market has evolved and CSR's view, which is shared by most in the industry, is that integration of Bluetooth and other communications technologies onto the baseband is unlikely to happen due to the practical difficulties of integration and the differing timescales of product development.

"The standalone baseband market is crowded and mature and as such does not offer CSR an acceptable level of growth opportunity. In contrast, we are focusing on the connectivity centre to expand the footprint in the handset."

At the time of the deal, James Collier, technical director and co-founder of CSR, told EE Times "there is great synergy and very little overlap between the IP we are acquiring from Ubinetics and our own. In fact we share many customers in the mobile phone design area, and we can build on that."

CSR paid $48 million for Ubinetics' software group, which effectively shut down the Cambridge company that a few months earlier sold its test and measurement group to Aeroflex.

Commenting on the Q1 08 results Joep van Beurden, CSR CEO, said: "The economic climate and its impact on consumer sentiment is continuing to lead our customers to lower their inventory levels and shorten order times, particularly in the consumer electronics and headset segments."

CSR's share price saw an earlier steep decline in February when the company said inventory buildup in China would hurt demand in the first half of this year.

- John Walko
EE Times Europe





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