US Edition CSR
183.1p +16.3
Questor says HOLD
CSR is to halt investment in its digital television systems-on-a-chip and silicon tuners businesses, which it acquired as part of Zoran, the US rival it bought last year. It will instead focus on areas where it is market leader. The move will cost it an extra $10m of restructuring costs by the end of the second quarter next year.
Investors were reassured that the company continued to expect fourth-quarter revenues to be in line with guidance in the range of $230m to $250m.
"We continue to take a disciplined approach to capital allocation and cost control," said Joep van Beurden, CSR's chief executive. "The actions we have announced today will allow us to increase our focus on the areas of the business that offer the best prospects for delivering sustained and profitable growth."
He said investment would be focused on voice and music, automotive "infotainment", cameras, document imaging, gaming and Bluetooth low energy technology. Clearly management have made the call that its share of the markets it is quitting did not merit continued investment, and focusing elsewhere was seen as a wise move by analysts.
"They are doing more than just pruning – they are cutting out the dead wood," according to Ian Robertson, an analyst at Seymour Pierce. "They are achieving material cost savings for minimal loss in short, medium and, realistically, long-term revenues."
CSR exists in a highly-competitive, high-tech sector, which requires it to innovate continually or to die.
Last month it unveiled a new chip which for the first time will pinpoint the location of a device to within 10 metres.
By working indoors, the chips will allow people to use their mobiles to track friends within shopping centres, for example, and enable retailers to target customers with offers or adverts as they enter the store.
With investment comes opportunity but also risk.
Questor says hold.