Filtronic in focus after deal

NEWS that Filtronic is giving away its loss-making compound semiconductors business will today raise speculation over the group's future focus.

Friday's announcement by the Saltaire-based telecoms components company will allow it to concentrate on its core operations but analysts will be looking for pointers as to how it plans to use its cash pile from disposals.

Filtronic has not revealed the new owner of the Newton Aycliffe business, but it is believed to already be operating in the semi-conductor market.

While Filtronic will not receive any money up front for the deal, it was feared that it may have to shut down the business which makes gallium arsenide chips – faster and capable of holding more content than silicon chips – which analysts said would have cost it up to £13m.

Earlier this year it cut 115 of the 319 jobs at the County Durham plant after its biggest customer took production of the chips in house.

The business made operating losses before exceptionals of £1.5m in the year to May 31, down from losses of £7.5m the year before.

Filtronic is keeping its small broadband business also based Newton Aycliffe.

The disposal, announcedon Friday afternoon will see Filtronic retain the pension liabilities and it will “receive deferred consideration dependent on the

achievement of certain targets”.

It leaves Filtronic focused on its point to point wireless communications and electronic defence equipment businesses. Early last year its sold the bulk of its core wireless infrastructure business.

Now analysts will be watching what chief executive Charles Hindson and his team plan to do next.

One source close to Filtronic said: “This disposal of the semi-conductor business frees up management time to go out and concentrate on the rest of the business.”

Filtronic's share price ended last week down 11p at 169p..