Filtronic feeling the pain of key customer buyout as shares drop

Filtronic's biggest point-to-point customer Nera Networks has been bought by Israel's Ceragon Networks, a rival maker of point-to-point systems, for $48.5m (30.6m).

Panmure Gordon analyst Mark Davis said: "The sale of Nera Networks, Filtronic's largest point-to-point customer, to Ceragon Networks is expected to lead to a loss of revenues.

"At this stage it is difficult to gauge the timing of this impact but we provisionally estimate about 20 per cent of 2012 revenues are at risk and see a commensurate decline in valuation," he added, cutting his rating on the stock to 'hold' from 'buy'.

Shares in Shipley-based Filtronic closed down 5p at 38p last night.The shares slid 24 per cent to 43p on Thursday

The company said as Ceragon already makes point-to-point systems it is braced for a "potentially significant reduction" in point-to-point sales. Filtronic recently bought Leeds wireless firm Isotek in a move that will rebuild its business in Yorkshire.

The group, formed in 1977 by University of Leeds Professor David Rhodes, was once a formidable force in the telecoms technology market but shrunk significantly in recent years by selling off businesses.

Filtronic, whose point-to-point technology links mobile phone base stations, believes the Isotek deal will be a catalyst for growth. It bought Isotek for 10.7m in cash and shares.