Investors in Wolfson, the London-listed microchip maker, today looked past a slump in first-half profits, concentrating instead on a well-received acquisition and forecast-beating second-quarter numbers.

First-half profits were down 43 per cent on the same period last year, to $12.5 million (£6 million), hit by greater spending on research and development and staff hires.

However, shares in the group, which specialises in audio technology and supplies chips for devices including iPods, mobile phones and game consoles, were up 2.5 per cent in morning deals, to 339p, valuing the company at about £385 million, after second-quarter figures came in at the top end of analyst expectations.

The stock plunged to 270p from about 450p in October on a shock profits warning blamed on the absence of a strong-selling consumer gadget requiring a Wolfson chip in the run-up to Christmas.

Today, the shares also reacted favourably to the $24.8 million acquisition of Sonaptic, a rival technology group that provides noise cancellation software that contributes to better sound quality in mobile phones and MP3 players.

Analysts at Merrill Lynch said: “We view this as an important step for Wolfson in its roadmap to add features around its audio solutions.”

Sonaptic employs about 31 people at its base in High Wycombe in Buckinghamshire.

The deal is a part of a push by Wolfson to add features to its core audio technology. Earlier this year, the group bought Oligon, the Edinburgh-based semiconductor maker, which specialises in integrating microphones into semiconductors, for up to £2.9 million. That deal was its first acquisition.

Wolfson reported second-quarter revenues of $49.5 million, up from $47.7 million a year ago, driven by a strong performance from its Consumer Audio unit on strong demand for chips from flat TVs and car sound systems.

That offset weaker demand from makers of MP3 music players, which analysts believe dipped about 10 per cent.

A gross margin of 52.9 per cent was in line with analyst forecasts.

Today Wolfson said that its current order backlog was at record levels and that it expects revenues in the third quarter of between $63 million and $68 million and a gross margin sustained at around 53 per cent.

The company said it continues to review the possibility of paying a dividend, but has no plans to do so at the moment.

Tempus: Wolfson puts faith in expansion

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