Filtronic’s shares plunged over x per cent yesterday following the news that results from its wireless business will be “substantially” below market expectations.
In an unexpected trading update ahead of today’s interim report, the Leeds-based mobile phone technology company said full-year results will be hit by delays due to technical issues that came up during the final testing stages of a new product.
Analyst George O’Connor, at Panmure Gordon, said: “Filtronic warns that results from its wireless division will be substantially lower than expectations due to a delayed product debut and slipped orders.
“The news is disappointing as it builds on the news in September that broadband was weak.
“As seen from a slew of telco and network equipment manufacturer results of late, the macro backdrop is more hindrance than help at the moment.”
Panmure Gordon said it was putting its forecasts under review ahead of full disclosure at today’s interim results.
Filtronic said that its wireless business is in the process of introducing a number of new products to original equipment manufacturers (OEMs).
These OEMs typically include the likes of Nokia, Lucent and Alcatel.
The group said that based on the anticipated timing of these new product introductions, it had previously thought that its annual sales revenue would increase month on month through the current financial year with a heavy weighting to the second half.
It had thought that a significant element of this growth would be generated from an advanced integrated antenna, but it said the development of this product has been delayed due to technical issues that arose during final product testing and qualifica- tion.
“Whilst we are implementing solutions to these issues, the delay will mean that the antenna will now enter production at least four months later than anticipated,” said chief executive Alan Needle.
On top of this, an expected order from an OEM customer has not been received.
Mr Needle said that another two programmes with a major OEM have been delayed into the next financial year.
“Due to the impact of the programmes affected, the board now expects that the results for the wireless business in the current year will be substantially lower than current market expectations,” said Mr Needle.
In September, the group said that its broadband business had traded “marginally lower” than in the first half of the previous year and slightly below the level it had expected.
It added that the business has been hit by the curtailment of orders from customers selling to Russia, a market that had been an early adopter of E-band and V-band technology.
“The board believes that demand for E-band and V-band products will grow in the coming years as this technology is adopted more widely.
“However, it does not foresee a significant improvement in market conditions in the near-term,” said Mr Needle.
He said that despite these setbacks, the group remains confident in its strategy and the sales growth potential of its new products.
“This should lead to a much improved trading performance over the medium-term,” he added.
But the market wasn’t convinced and the shares closed down xp at xp.
Filtronic will report interim results for the six months to November 30 this morning.