Yesterday’s 6 per cent advance in the shares of CSR may not have matched that of its proposed merger partner - it is paying a hefty 91 per cent premium for California’s SiRF Technology - but it is welcome all the same.

For as yesterday’s full-year results from the Bluetooth semiconductor designer attest, underlying conditions in its sector remain dire. A combination of weak consumer demand and heavy destocking by mobile handset manufacturers mean that revenues in the first quarter of CSR’s new financial year will be about half those of 2008 - or at the bottom end of the forecast range.

In contrast, the tie-up with SiRF provides scope to protect profitability through economies of scale. CSR has cut its own costs by a better than expected $25 million (£17 million), but yesterday’s merger promises a combined $35 million of savings within two months of the deal’s scheduled completion in June. That explains CSR confidence that the all-share acquisition should “significantly” enhance its earnings from the second half of this year.

The combination is not without challenges. SiFR is losing both money (a forecast $35 million this year) and market share, and is in the midst of a long-running patent infringement case with Broadcom, its larger compatriot. The corollary is that, valued at barely more than its $262 million cash pile at yesterday’s opening price, CSR clearly had to do something to diversify away from its Bluetooth base. SiRF brings a strong position in hardware for portable navigation devices (it remains the world No 1), and should enable CSR to satisfy the demands of handset makers for so-called combi chips that bring GPS and Bluetooth together in a single microprocessor. The fact that CSR appears to have received the blessing of SiRF’s biggest customers - the likes of Motorola, RIM, Samsung and TomTom - to proceed with the deal should be encouragement enough for now.

Buying SiRF is at one level an admission that CSR’s own GPS strategy - expedited through the $75 million purchases of NordNav and CPS two years ago - is not working. Cross-border integration also brings considerable risks, while the first products from the merged entity will not start to ship until 2011.

The semiconductor sector will be slow to recover, with any pickup in volumes likely to be partially offset by pressure on price. But SiRF has bought CSR time, while yesterday’s parallel disclosure that its BlueCore7 chip is being incorporated into Nokia products suggests that the relations with its biggest customer that were damaged by the BlueCore5 delays are now on the mend. Further, recent contract wins in the US and Denmark suggest that, at the least, CSR will maintain its 80 per cent share of the market for Bluetooth headsets.

At 198p, hold on.

Brit Insurance

Whether or not Brit Insurance is one of the predators circling the smaller Chaucer Holdings was not a question answered by yesterday’s trading update from the Lloyd’s of London insurer.

What it did reveal was that, because of a weaker pound, Brit’s full-year profits will be substantially better than the City had been expecting. The company books about half of its business in America and the accounting treatment of US dollars set aside for US claims not yet paid, and premiums already received, means it can recognise a currency gain. Such noncash profits can swiftly unwind, so greater heed might be paid to the returns on Brit’s investment portfolio: about £21 million in the fourth quarter of 2008, or a respectable 0.16 per cent for the year - enough to eclipse the likes of Catlin and Hiscox. Further, Brit echoed the sentiment of its peers in predicting an acceleration in premium rate increases during 2009 because of continued constraints on capital flowing into its niche.

Brit’s exposure to litigation against financial institutions for credit-crunch losses remains a concern (it is the only quoted Lloyd’s vehicle to have a sub-prime claims reserve) and may weigh on the shares for now - despite yesterday’s reassurance that this accounts for a falling proportion of income. However, Brit boasts a sound balance sheet, a chunky dividend yield - 6.7 per cent - and trades at a 12 per cent discount to Numis’s estimate of net tangible assets. At 222½p, or six times 2009 earnings, Brit - a constituent of the Tempus Ten - is a long-term buy.

May Gurney

Sitting on £20 million of cash and drawing 90 per cent of sales from government and regulated utilities is no guarantee of share price resilience. Ask backers of May Gurney, the AIM-listed contractor, whose stock trades at half the level at which it was recommended here little more than a year ago.

True, there have been setbacks. The company has lost a gas maintenance contract with National Grid that came with a 2007 bolt-on acquisition, while the collapse in housebuilding activity has hurt its landfill remediation and pile driving operation - May Gurney’s principal exposure to the private sector.

Further, the impending renewal of long-term contracts with water utilities ahead of the 2010 start of their five-year regulatory settlement with Ofwat creates an element of uncertainty. But as yesterday’s trading update confirmed, May Gurney’s order book remains comfortingly high: about £1.25 billion. Its newly won £80 million deal with British Waterways - under which it will undertake repairs on its 2,000 mile network - is also under way. At 141p, or seven times 2009 earnings, May Gurney is a defensive small-cap burdened by a cyclical share price rating and the aversion of institutions to AIM. Stay on board.

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