ParthusCeva, the technology company created from the merger of Parthus and a division of the US-Israeli firm DSP Group, cut its revenue guidance for 2003 by 40 per cent yesterday.
The Dublin-based firm, which develops computer chip technology, said it revenues would be $40-$46 million (€38.9-$44.7 million) next year, much lower than the $75-$80 million forecast when the merger was announced by Parthus in April.
The revenue guidance, which had been delayed on two separate occasions by ParthusCeva, sent the company's shares down almost 4 per cent in early trading on the Nasdaq Stock Exchange in the US.
Mr Barry Dixon, technology analyst with Davy Stockbrokers said that much of the disappointing market news had already been priced into the stock.
He added that the company had also reduced operating costs significantly and would be profitable in 2003.
The much lower revenue forecasts were not unexpected because of the sharp downturn in the market for semiconductors used in mobile communications.
Recently, research firm Gartner Dataquest said sales in this field were down more than 30 per cent, and ParthusCeva rival ARM recently forecast a similar reduction in its revenue guidance for next year.
The company said it would take a one-time restructuring charge of $5-$7 million in the current quarter, and a non-cash charge for in-process research and development expenses incurred as a result of the merger.
The number of staff working in the combined firm is expected to be about 240.
ParthusCeva said it was forecasting gross margins of 85 per cent and operating profit of 10-15 per cent.
It estimates licensing and royalty revenues will comprise approximately 85 per cent of revenues for 2003.
Mr Kevin Fielding, chief executive of ParthusCeva, said the firm was taking a conservative outlook for 2003.
"We believe \ is prudent in light of the continuing weakness in the semiconductor market and limited visibility in our sector.
"Regardless of the timing of the industry recovery, we believe we have the technology and financial base in place to achieve our corporate goals of market leadership in DSP technology and profitable growth," he added.
A filing made by ParthusCeva - which has significant operations in Israel - to the Securities and Exchange Commission in the US yesterday suggests it could be affected by a future war in the Middle East.
"Any major hostilities involving Israel, or the interruption or curtailment of trade between Israel and its present trading partners, could significantly harm our business, operating results and financial condition," wrote the company.
"In addition, certain of our officers and employees are currently obligated to perform annual reserve duty in the Israel Defence Forces and are subject to being called for active military duty at any time.
"Although we have operated effectively under these requirements since our inception, we cannot predict the effect of these obligations on the company in the future.
"Our operations could be disrupted by the absence, for a significant period, of one or more of our officers or key employees due to military service."
