Bluetooth specialist CSR's shares dropped 26 percent in early trading on Monday after it reduced profit expectations for the year, blaming weaker than expected second half customer demand.
The market leader in chips and devices using Bluetooth the short range wireless radio link that transfers data between mobile phones, computers and their accessories said a change in purchasing patterns at a headset customer and revised production plans at two other customers were the main reason for the downgrade.
It has recently become clear that customer demand in H2 2006 will not be as strong as anticipated, principally due to changing purchasing patterns at a headset customer, the company said in a statement.
The Cambridge based company now expects third quarter revenue of $210 million (111 million pounds) to $215 million, while fourth quarter revenue is now estimated to come in at around $200 million.
Analysts said that weaker marketwide demand or oversupply were likely to be the cause of the problems rather than the firm losing out to rivals.
We believe this (revenue shortfall) is more likely a reflection of weaker demand or inventory build rather than loss of market share by CSR, analysts at UBS wrote in a morning note.
Although CSR reiterate target handset bluetooth attach rates of 35 40 percent in 2006, we are concerned that the size of Q3 and Q4 revenue shortfalls reflects softer than expected bluetooth demand in 2H06, they added, saying that they would revise share price and earning targets for the firm.
CSR is due to report third quarter results on November 8.