Filtronic counts the cost of sale
Sep 30 2006 By Howard Walker, The Journal
Telecoms technology firm Filtronic has warned that the recent sale of its wireless business and subsequent reshaping will result in operating losses in the current financial year.
The company, which employs 450 people at the former Fujitsu factory in Newton Aycliffe, County Durham, is selling the wireless infrastructure arm to help cut debt and plough more money into the North-East plant, which manufactures semiconductors.
Last month, Filtronic announced it would be cutting the amount it planned to invest in the factory from £45m to £15m, saying its original estimate of the investment needed at Newton Aycliffe was no longer accurate.
Yesterday, chairman John Poulter warned that the sale of the wireless business would initially put a dent in the company's bottom line.
Mr Poulter told Filtronic's annual general meeting: "Following the disposal of the wireless infrastructure business, the scale of the group's activities will be substantially reduced.
"This will result in operating losses pending the development and reshaping of the group, which the board is addressing as its priority."
Shares in the firm initially fell 5.5% following the announcement and closed at a final price of 215p, a fall of 5p.
Filtronic agreed to sell its wireless business to US firm Powerwave Technologies in July before rejigging the terms of the deal in August. It will now receive $185m (£99.1m) and 17.7 million newly issued shares in Powerwave.
Filtronic, which also makes the chips used in military ground and air systems used to detect and jam enemy radar, said underlying trading performance for its compound semiconductors division was in line with expectations, but there had been some problems in its defence electronics arm.
Mr Poulter said: "The recovery of defence electronics is proceeding more slowly than anticipated."
However, Filtronic was more upbeat about the future of the compound semiconductors division, predicting recent expansion of capacity would create revenue growth in the year in line with expectations.
Yesterday's AGM also marked the retirement of Filtronic's founder and former chairman, Professor David Rhodes, from the company.
John Poulter said: "On behalf of the board and the company, I would like to express our appreciation for David's unique contribution, from start-up to plc, and for the inspiration and commitment to Filtronic and its employees that he has demonstrated for over 25 years."
