Boom in smartphones has helped microchip designers

The boom in smartphones – mobile phones that can access the internet and download applications – has helped British-based microchip designers CSR and Wolfson Microelectronics report strong first-quarter results.

But two other British technology firms, FTSE-listed accounting-software developer Sage and IT services firm Logica, revealed lacklustre performance relative to some of their peers.

The arrival of Apple's iPhone and a new range of handsets using Google's Android platform have forced the major mobile phone manufacturers such as Nokia, Sony Ericsson and Samsung to raise their games. Neither CSR nor Wolfson have their chips in the latest Apple devices – the iPhone 3GS and the iPad – but both have benefitted from the rise in demand for their chips from other handset manufacturers.

Cambridge-based CSR, best known as a maker of chips that use Bluetooth short-range wireless technology, buoyed investors today with news that it has won a major customer for its new range of wi-fi chips; CSR refused to name the customer, but it is rumoured to be Samsung. The news came as CSR, which also makes GPS chips, announced a return to profit for the three months to 2 April as revenues more than doubled to $173m (£114m). It expects second quarter revenues of between $210m and $225m.

Two years ago, Edinburgh-based Wolfson saw its shares plunge when its chips, which convert digital signals to analogue and are crucial for music players, were rejected by Apple for the new version of the iPhone. But today that firm beat the City's forecasts for its first quarter as sales increased 13% to $28.5m. The firm made a better-than-expected loss of $6.9m and management hinted that it could swing back into profit later this year.

Sage, meanwhile, was also hinting at better things. The company, based in Newcastle, has seen its core market of small and medium-sized businesses hold off from investing in new software as they battle the recession. But chief executive Paul Walker said: "We believe there is pent-up demand which will be realised as markets recover."

Sage announced first-half revenues down 4% at £719m although cost-cutting helped pre-tax profits increase 11% to £177.5m. Analysts, who described the figures as 'solid' but not inspiring, have become increasingly concerned that Sage is lagging some of its rivals who are letting customers access their software over the internet, rather than selling physical products. Walker, however, believes its customers will be rather late adopters of so-called 'cloud' computing.

"In the longer term, we have a significant opportunity to provide connected business solutions to our customers," he said. "In the short term, while the recovery remains tentative, we will continue to manage our cost base prudently whilst investing and preparing for future profitable growth."

IT services firm Logica, meanwhile, announced that first-quarter revenues had declined a narrower-than-expected 2% to £939m. The company reiterated that it expects annual revenues and margins to be at a similar level to 2009.