UPDATE 3-CSR, Wolfson bullish after phone demand lifts Q1

* CSR Q1 sales up 115 pct, swings to EPS profit of $0.05

* Wolfson Q1 sales up 13 pct, operating loss $4.9 million

* CSR says no provisions yet for Broadcom patent disputes

* CSR shares up 3 percent, Wolfson down 3 percent

(Adds Wolfson CFO comments, background, updates shares)

By Georgina Prodhan

LONDON, May 5 (BestGrowthStock) – British chipmakers CSR (CSR.L: ) and
Wolfson Microelectronics (WLF.L: ) on Wednesday reported stronger
first-quarter sales and predicted improvements this quarter as
demand rebounded for mobile phones and consumer electronics.

CSR, which dominates the Bluetooth market and is
diversifying into GPS navigation and Wi-Fi chips, said revenue
more than doubled and underlying earnings returned to profit,
lifting its shares as much as 4 percent.

The Cambridge-based company, which counts Apple (AAPL.O: ),
Nokia (NOK1V.HE: ) and BlackBerry maker Research in Motion
(RIM.TO: ) among its customers, said it had won its first tier 1
Wi-Fi customer and and added a major GPS client.

Analysts said they believed the Wi-Fi customer was Korean
electronics giant Samsung (005930.KS: ). CSR declined comment.

Shipments of smartphones such as Apple Inc (Read more about Apple stock future.)’s (AAPL.O: ) iPhone
— crucial for both companies — surged 50 percent in the first
quarter to 54 million handsets, or 18 percent of all phones
shipped. This year they are expected to rise 35 percent.

The results confirm wider reports of improving demand in the
chip industry. Wireless chipmakers Broadcom (BRCM.O: ) and Texas
Instruments (TXN.N: ) reported strong results last week.
[ID:nN27114858] [ID:nN26211188]

CSR forecast a sequential increase in revenue this quarter
to between $210 million and $225 million from $173 million in
the first quarter. Its shares, in decline since March, rose 3.4
percent to 434.3 pence by 0751 GMT.

“We are very well positioned in all markets. GPS is
everywhere,” Chief Executive Joep van Beurden told Reuters in an
interview, citing digital cameras, sports watches and emerging
markets as important growth drivers.

UBS analysts wrote in a note: “These are a solid set of
results with strong guidance. Given the recent share
performance, we believe expectations were low going into results
compared to other semis and following strong execution and
customer wins the share should react well.”

CSR said it had as yet made no provision in relation to
patent disputes with rival Broadcom. The lawsuits relate to GPS
technology CSR acquired when it bought U.S.-based SiRF last
year, although its new products no longer use those patents.

Wolfson reported a 13 percent rise in revenue and said 90
customers had begun to design its new chips into their products,
including one top smartphone maker using Wolfson’s latest audio
product, which it said would translate into revenues next year.

Its operating loss widened as it spent more on research and
development and helping customers with new products, but Chief
Financial Officer Mark Cubitt said profits would improve during
the year as revenues would rise while costs remained steady.

“From H2 2010 we expect to return to sustainable
profitability,” he said on a conference call with journalists.

Wolfson shares fell 4 percent to 163 pence in a 0.9
percent-weaker technology market (.SX8P: ) as its underlying
operating loss widened to $4.9 million and it predicted a gross
margin slightly down to 50-51 percent this quarter.

“Our concern that so much is required in H2 to match wider
market expectations means that we will wait until hearing from
the management before jumping on the Buy recommendation — for
the moment we stay on Hold,” Seymour Pierce analyst Ian
Robertson wrote.

Wolfson also forecast a sequential improvement in revenue
this quarter to between $30 million and $35 million from $28.5
million in the first quarter. Its order backlog was $27.5
million, up from $23 million at the same point last quarter.

Stock Market Trading

(Editing by David Holmes and David Cowell)

UPDATE 3-CSR, Wolfson bullish after phone demand lifts Q1