CSR results show good progress


10-05-2011

CSR plc has published its unaudited results for the first quarter ended 1 April 2011, showing revenues in line with management guidance, gross margin improved, and good progress on new generation of products and platforms.

CSR plc reports first quarter results for the 13 weeks to 1 April 2011:

First quarter financial performance

  • Q1 2011 revenues of $163.9m (Q1 2010: $173.0m) in line with management guidance,
  • Underlying gross margin increased to 49.1% (Q1 2010: 46.5%) driven by demand for higher margin products in Audio & Consumer and Automotive & PND (personal navigation devices),
  • Underlying R&D expenditure of $49.7m (Q1 2010: $43.7m) reflecting continued investment in our new generation of products and platforms,
  • Underlying SG&A expenditure of $30.7m (Q1 2010: $25.3m) reflecting the last elements of Broadcom litigation expense and expected to decline going forward,
  • Underlying diluted EPS of $0.02 (Q1 2010: $0.05) after finance income and R&D tax credits,
  • Diluted EPS of loss $0.01 (Q1 2010: profit $0.02) under IFRS,
  • Bought back 5,096,000 ordinary shares for a consideration of $31.0m during first quarter 2011.

Good progress on key catalysts for growth

  • New smartphone GPS win with Huawei, adding to the previously announced Tier One GPS design win with Samsung, 
  • Strong position in feature phones with CSR8000 series of Bluetooth products. Market leadership position maintained in the Bluetooth controller market for gaming and in Bluetooth audio headsets,
  • Design wins for SiRFatlas® and SiRFprima® GPS/infotainment auto industry platforms,
  • Development of new generation 40nm products, including CSR9800 Wi-Fi/Bluetooth combination chip on track, with commitment from a Tier One smartphone manufacturer to be lead customer.

 

First Quarter Financial Summary

Underlying*

 

IFRS

 

Q1 2011

Q1 2010

Change

 

Q1 2011

Q1 2010

Change

Revenue

$163.9m

$173.0m

($9.1m)

 

$163.9m

$173.0m

($9.1m)

Gross margin

49.1%

46.5%

2.6%

 

48.2%

45.8%

2.4%

R&D expenditure

$49.7m

$43.7m

$6.0m

 

$52.7m

$46.8m

$5.9m

SG&A expenditure

$30.7m

$25.3m

$5.4m

 

$29.5m

$27.5m

$2.0m

Operating profit (loss)

$0.0m

$11.5m

($11.5m)

 

($3.3m)

$4.9m

($8.2m)

Diluted earnings (loss) per share

$0.02

$0.05

($0.03)

 

($0.01)

$0.02

($0.03)

  

Joep van Beurden, Chief Executive Officer, said:  “We have delivered revenues in line with our expectations and improved our gross margin, reflecting the strength of both our Audio & Consumer and Automotive & PND businesses. Our Handset business has secured design wins in smartphones, and we have made good progress on our operational plans to implement a new generation of products, to diversify our revenue and to expand beyond components into platforms.
 
“Our next-generation of 40nm products, including the CSR9800 Bluetooth/Wi-Fi combination chip, the SiRFprimaII™ GPS/infotainment platform and the SiRFstarV™ GPS chip is on track, and is expected to contribute to revenues in 2012.  We also launched CSR6000, a Wi-Fi platform for cars, and are working with Tier One suppliers in order to take this product into mass production, with revenues currently expected in early 2012.
 
“We expect a stronger revenue performance for the second half of the year relative to the first half. Our Handset business will begin to show the benefits of our recent smartphone design wins, such as those with Samsung and Huawei, although we are seeing weakness in some areas of the handset market. We expect our Automotive & PND business to grow driven by the automotive design win pipeline and easing of capacity constraints in the area of PND products, and our Audio & Consumer business will continue to see growth led by increased demand for our products across the business unit.
 
“We continue to invest in our catalysts for growth, which are building in strength.”
 
OUTLOOK
 
We expect second quarter revenues to be in the range of $185m to $200m.
 
Notes to Financial Summary Tables
 
Non-GAAP Disclosure: Although International Financial Reporting Standards (“IFRS”) disclosures provide investors with an overall view of CSR’s performance, CSR also provides underlying line item disclosure.  CSR believes that these underlying items (in particular, underlying gross margin, underlying R&D, SG&A expenditure, and operating profit, operating margin, profit before tax and earnings per share derived therefrom) provide additional information on underlying trends that is useful to investors.  Management uses these underlying measures, along with the most directly comparable IFRS financial measures, to assess CSR’s operating performance and value creation. These underlying measures form the basis for management’s performance targets and resource allocation decisions, and are also used to determine and manage the long term growth of the business. We present and discuss these measures in order to: (a) provide consistency with the way management views the business and discusses performance with investors; (b) ensure that the measures are fully understood in the light of how CSR manages the business; (c) properly define the metrics used and confirm their calculation; (d) share the metrics with all investors at the same time; (e)  improve transparency for investors; (f) assist investors in their assessment of the long-term value of CSR; and (g) assist investors in understanding management behaviour. The term “underlying” is not defined in IFRS, and may therefore not be comparable with similarly titled measures reported by other companies.  Underlying measures should not be considered in isolation from, as substitutes for, or as superior measures to, IFRS measures.  A reconciliation of each underlying measure to the nearest IFRS measure is provided in notes 3, 4, and 6.
 
*Underlying results for Q1 2011 add back charges in cost of sales for amortisation of acquired intangible assets (Q1 2011: $1.5m; Q4 2010: $1.5m; Q1 2010: $1.3m), in R&D for the amortisation of acquired intangible assets  (Q1 2011: $1.2m; Q4 2010: $1.2m; Q1 2010: $1.3m) and share option charges (Q1 2011: $1.8m; Q4 2010: $1.1m; Q1 2010: $1.8m) and in SG&A for amortisation of acquired intangible assets (Q1 2011: $0.9m; Q4 2010: $0.9m; Q1 2010: $0.8m), integration and restructuring charges (Q1 2011: $0.9m; Q4 2010: $1.1m; Q1 2010: $nil), proposed acquisition fees (Q1 2011: $4.0m; Q4 2010 & Q1 2010: $nil), share option charges (Q1 2011: $1.5m; Q4 2010: $0.6m; Q1 2010: $1.3m), litigation settlement income (Q1 2011: credit of $14.5m; Q4 2010: $nil; Q1 2010: $nil) and  litigation settlement costs (Q1 2011: $6.0m; Q4 2010: $59.8m; Q1 2010: $nil). Underlying diluted earnings per share also adds back the tax effects associated with the above items, as well as the recognition of pre-acquisition losses (Q1 2011: $nil; Q4 2010: credit of $11.9m; Q1 2010: $nil),  the unwinding of discount on litigation (net of tax) (Q1 2011: $0.5m; Q4 2010; $nil: Q1 2010: $nil) and deferred tax on share options (Q1 2011: $nil; Q4 2010: $0.5m; Q1 2010: $nil).

 
See www.csr.com for the full results

 

About CSR

CSR plc is a leading provider of multifunction connectivity and location platforms. CSR's technology portfolio includes Bluetooth, GPS, FM, Wi-Fi (IEEE802.11), UWB, NFC and other technologies to enable silicon platforms that incorporate fully integrated radio, baseband and microcontroller elements. CSR's Connectivity Centre is designed to enhance the user experience with mainstream mobile devices by intelligent integration of multiple wireless connectivity and location-awareness technologies. CSR's Location Platforms are complemented by wireless connectivity and multimedia capabilities for high-volume mobile consumer devices and commercial applications.

CSR's technology has been adopted by market leaders into a wide range of mobile consumer devices such as mobile phones, automobile navigation and telematics systems, portable navigation devices (PNDs), wireless headsets, mobile computers, mobile internet devices, GPS recreational devices, digital cameras, mobile gaming, plus a wide range of personal and commercial tracking applications.

 


 

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