WOLFSON chief executive Mike Hickey believes the Edinburgh-based chip maker is “in with a shout” of making an underlying profit this year thanks to high demand for smartphones and tablet computers in the run-up to Christmas.
Figures released yesterday showed the firm swung back into the black during the third quarter after sales of chips for mobile phones jumped by 71 per cent year-on-year and tablet chips leapt by 88 per cent.
Wolfson won further contracts from a raft of clients including Microsoft, Nokia and Samsung, while technology analysts recently revealed that one of its chips was also being used in an adapter made by Apple.
The company lost a contract with Apple in 2008 so renewing its relationship with the maker of some of the world’s most-popular gadgets has been heralded by analysts as a big step for Wolfson, which spun out of Edinburgh University in 1984 and joined the stock market in 2003.
Hickey told The Scotsman: “The fourth-quarter can be hard to predict because some clients can delay the releases of new products until the new year if Christmas doesn’t go as they expect. But I believe we’re in with a shout of returning an underlying profit for the full year.”
Sales rose by 31 per cent year-on-year in the three months to 30 September to $53 million (£33m), leading to an underlying operating profit of $3.4m, compared with a loss of $700,000 for the same period last year.
But Numis Securities analyst Nick James questioned Wolfson’s margins. He said: “The weak gross margins, which it feels likely are partly driven by tough pricing at Samsung, demonstrate how difficult it is to drive this business back to profitability even when it has some very high-profile design wins.”
Hickey argued Wolfson needed to be trading with high-volume firms such as Samsung.