For Chris Gurry, the global economic downturn dealt a heavy blow. As the managing director of Cml Microsystems (LON:CML), a business that derives 90% of its sales from exports, the collapse of international markets at the end of 2008 forced his team to reassess every aspect of the company’s operations. For a short time the silicon chip manufacturer even toyed with the prospect of de-listing from London’s Main Market as inclement market conditions triggered falling revenues and a great deal of uncertainty about the future.
During the course of 2009, investor confidence withered and CML’s share price plunged. However, signs of a market recovery earlier this year marked the start of a resurgence in the share price as CML emerged a leaner, more focused business, committed to its market listing. This week the company reported its results for the year to March 31, 2010, with revenues up 12% to £18.0m, pre-tax losses down to £0.4m against £2.0m last year and a reduction in debt by £1.7m to £2.1m. As a result, the company’s shares have spent the early part of June soaring back to around 73.5p and leaving Chris Gurry and his team keen to drive the company back to profitability this year. He spoke to Stockopedia news.
Chris, can you give me a summary of the CML business? Where are your target markets and who are you customers?
We design silicon chips, which we then get fabricated onto silicon using subcontractors in the Far East and then we manufacture and package those products and sell them around the world. Most of our products are made for three market areas: Wireless, which is about 41% of our turnover, Storage, which represents about 40% and Telecom markets, which account for 13%.
In the Wireless segment, we focus on sub-markets in the sector. The typical end products where you would see our chips are professional walkie-talkies used by professional services such as police, fire and ambulance. The radios that they use would typically have at least one of our chips inside and potentially up to three. The top players in that market are Motorola (NYSE:MOT), Kenwood and Icom, the Japanese companies, and Sepura, a UK company which is the number two Tetra handset supplier worldwide. They are all customers of ours.
How challenging have your markets been during the last 12-18 months…
Not a company I follow but have been looking for a place to park this latest commentary on CML with a view to looking into it at a later date. Still working on some Colombian oilies you see :)
http://www.fool.co.uk/news/investing/company-comment/2011/10/13/why-the-smart-money-has-bought-this-small-cap.aspx?source=ufwflwlnk0000001
