Elektrobit Lowers Financial Outlook Due to Problems at US Customer
Published on: 11th Jan 2013
Note -- this news article is more than a year old.
By: Ian Mansfield
Wireless components manufacturer Elektrobit has lowered its fourth quarter financial outlook due to the likely bankruptcy of a US customer.
The reason for the weakening of the fourth quarter is the write-down of EUR 4 million in total, booked as result of the financial challenges faced by a US based customer of EB's subsidiary, Elektrobit. EB expects the operating result of the fourth quarter of 2012 to be approximately between EUR -0.4 million and EUR 1.1 million, the operating result of the second half of 2012 to be approximately between EUR 1.7 million and EUR 3.2 million.
The outlook for the net sales is expected to develop as earlier estimated and thus EB expects that the net sales of the fourth quarter of 2012 will be approximately EUR 57 million (EUR 49.0 million in 4Q 2011).
Based on the information received by Elektrobit, from the US based customer, the customer does not have enough funds to satisfy its contractual obligations. Due to the significant risk of the customer's insolvency, EB books an impairment of all accounts receivable from the customer, will not recognize revenue for the work already done for the customer project, and will book a cost reserve related to purchase obligations of the customer project. As a result EB's operating result of the fourth quarter decreases by approximately EUR 4 million in total.
The above mentioned customer project of EB's Wireless Business Segment was based on the EB's Specialized Device Platform technology to be used in the customer's mobile devices. Financial challenges of the abovementioned customer and the related financial implications for EB, will not affect the further development of EB's Specialized Device Platform, or serving of other customers.
EB will publish its Financial Statement Bulletin on February 19, 2013.