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CSR shares drop after Ubinetics purchase

Posted: 05 May 2008     Print Version  Bookmark and Share

Keywords:chips  protocol stacks  base band  mobile phone design 

Cambridge Silicon Radio (CSR) plc has announced that its shares have dropped by as much as 25 per cent in early trading after it acquired Ubinetics in 2005 for Rs.213.31 crore ($52.9 million). Demands for CSR chips from mobile phone makers and other consumer electronics services have decreased.

CSR reported Q1 loss of Rs.168.96 crore ($41.9 million) compared with a profit of Rs.13.31 crore ($3.3 million) for the same period last year. Sales during the quarter ended March 30 rose less than 1 per cent to Rs.648.81 crore ($160.9 million).

The company said second-quarter revenue will be Rs.705.67 crore ($175 million) to Rs.806.48 crore ($200 million), again a weaker than expected outlook.

CSR admitted the market has moved on since it bought the Ubinetics software business—which specialised in protocol stacks for mobile phone development—in August 2005. The company said the market is crowded and mature and does not offer sufficient growth opportunities.

In a statement, it 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 base band is unlikely to happen due to the practical difficulties of integration and the differing timescales of product development.

"The stand-alone base band 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 Rs.193.55 crore ($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 this year's Q1 2008 results Joep van Beurden, CSR chief executive, 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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