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CSR Bluetooth prospects "best in the world" - so sell, sell, sell!

It all sounds like good news from CSR. The Bluetooth silicon designer has new chips on the way, has 80% of the market for Bluetooth in 2007, and predicts "modest revenue growth" in the second half of the year, "following what is predicted to be broadly flat revenues for the first half of 2008 compared to the first half of 2007."

So why is everybody marking CSR shares down? It could be something as apparently trivial as today's news that Paul Goodridge, finance director, has decided to step down from the board of Bluetooth firm CSR "for personal reasons" - but that leaves us with a company which is the top seller in every Bluetooth market with a near-monopoly share of at least 50%.

It's hard to believe that the appointment of Will Gardiner, currently director of finance, technology and enterprise at BSkyB plc, is the problem, even if he doesn't join till June/July. On the face of it, all today's announcements are good news.

It's good news, but not as good as people predicted, is the problem. According to Philip Stafford: 

"Guidance thus implies 4 per cent year-on-year revenue growth in 2008, compared with our forecast of 16 per cent"

and the quote's from Paraag Amin, an analyst at Citi. But it's not the first bad news out of Cambridge Silicon Radio recently.

Back in September, the boss quit the company; John Scarisbrick had spent eighteen months in the job when he was replaced by Joep van Beurden, previously chief executive of NexWave. That was "by mutual consent." Shares dropped a whole 18p. It sounds like a substantial drop: but the share price was still six pounds and two pence after the fall, so apparently the City was pretty relaxed at that stage.

By early February, the price was 443p, and relaxation was over. But it's still not obvious that there was more to this than general financial gloom - even though there was some more news from the sector - none of it particularly good, but none startlingly bad. Analysts then downgraded CSR from "outperform the sector" to "match sector" - for no obvious reason. It was probably a judgement made in haste. It remains to be seen if it's right.

CSR itself remains apparently pleased with prospects. In yesterday's press announcement, Joep van Beurden said he had a plan:

"As the percentage of mobile phones with Bluetooth is now surpassing 50%, it makes sense to also use Bluetooth as a value centre on which to deliver additional functionality to improve the user experience.

And he added:

"Some of these functions sit well with Bluetooth including GPS, FM and other wireless connectivity radios such as Ultra Low Power (ULP) Bluetooth or UWB. The strength of our Bluetooth offering gives us a powerful platform on which to address phone makers’ needs to embed improved audio processing capabilities".

and he then went on to suggest that current slowdown in sales was not, after all, based on owning too much of the market. It is, he said, because CSR's Chinese customers (factories) are "running down inventory".

There's a webcast/podcast (take your pick) from CSR's own web site if you want more.