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CSR says things are good. Analysts disagree. CSR is right!
July 26, 2007
I've mentioned CSR here before, in many ways the poster-child for Bluetooth Technology. Well they've just released their Q2 results, which make interesting reading. As ever, it's a "record" quarter yada yada :-) Some selected highlights:
- Revenue for the quarter is up to $215.9m (Q2 2006: $182.4m)
- Operating Profit is up $44.8m (Q2 2006: $42.4m), but operating margin is down to 20.8% (Q2 2006: 23.2%)
- Non handset segment of the business growing nicely - now 21% of total revenues (H1 2006: 13%)
I also found these comments interesting:
- They reckon they can do average revenue growth of 15% - 20% p.a. over the next five years which implies CSR will reach $2 billion revenue by 2012
- They see attach rates (% of handsets having Bluetooth) growing from 35% (2006) to 40-50% (2007) to 70% ("medium term")
- The non handset areas flagged as opportunities are MP3 and MP4 players, digital televisions, gaming consoles, PCs, cars and cameras.
- As for headsets (where they are dominant): they "expect to maintain our headset market share at above 80% in 2007 and achieve a significant leadership position thereafter."
- They have stacks of cash ($185.1M), DSO is down, Inventory looks pretty well managed
- They have a range new products under development outside of "traditional" Bluetooth (GPS, Ultra low power Bluetooth, Ultra Wideband, etc.)
All in all - I think this is a pretty good story. They have loads of cash, are managing their way out of a) handset dependency and b) Bluetooth dependency, have some new gear in the pipeline, and seem to have reasonably well-managed costs. Will have to watch that margin slippage though, but it's likely that as Bluetooth matures, the margins on that side of the business slip further, especially as China becomes a larger mix in the target market (China kills margins, methinks!!).
The market reacted to the short term guidance (which was at the low to medium end of expectations) by taking the stock down 14%. I think this is probably a buying opportunity :-)
[Disclosure: I own no CSR stock]
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