Wolfson plunges on profit warning, Ocado suffers on service

Ocado (OCDO.L) was hit by a shower of negative broker comment after posting its half year results, while Wolfson Microelectronics (WLF.L) plunged on a profit warning.

Housebuilder Berkeley Group (BKGH.L) added to gains made on Friday and better than expected drilling results boosted Salamander (SMDR.L)

Wolfson Microelectronics

Shares of the computer chip maker Wolfson Microelectronics plunged 21% or 50p to 187p after posting a trading update warning that its profits would be at the low end of expectations.

In April the firm said profits could range between $37 million and $45 million. In a note today the company said: ‘Wolfson expects Q2 2011 revenues to be towards the lower end of previous guidance, at around $37m to $39m.’

Analysts at Espirito Santo said: ‘Given that Wolfson has flagged similar issues at the time of Q1 2011 results, we are surprised at the scale of downgrades in today’s trading update. As these issues are primarily related to timing of product launch at new customer, we believe Wolfson faces challenges in the near to medium term.’

Ocado

Ocado shares fell 9.95% or 18.6p to 168.4p despite moving into profit for the first time and striking a deal with French supermarket giant Carrefour. The online shopping company said it had entered into a supply partnership with Carrefour and from 14 July 2011 begin trialling a range of French produce to all Ocado customers across the UK.

But broker reaction to the online shopping and delivery firm’s half-year results was not positive.

Analysts at Arden Partners said: ‘It is good to see a product tie-up with Carrefour, but Ocado’s relationship with Waitrose remains as complicated as ever’, adding that they expected Ocado to ‘talk about the threat from Waitrose’s expansion of its delivery service in London.’

There were also concerns about the firm’s service capacity after the company said: ‘Strong customer demand for the Ocado service has delivered profitable growth, limited only by our operational capacity.’

Analysts at Espirito Santo said: ‘It is concerning that service standards are suffering as a result of capacity issues.’

Salamander Energy

Salamander Energy  announced that a discovery at its Bualuang oil field in Thailand looks better than expected sending its shares up 6.19% or 15.6p to 267.7p. James Menzies, chief executive of the Asia-focused oil exploration firm, said: ‘The ability to immediately tie-in to nearby infrastructure means these are high value barrels, which we expect to book and which will lead to a sharp upward revision to Bualuang reserves.

Analysts at Evolution Securities said: ‘While not a particularly large discovery the incremental value is not insignificant as we see scope to add a further 38p to our Core + Risked NAV. Indeed, the discovery helps underpin the value of Salamander.’