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21 March, 2006 - 11:02 By Staff Reporter

Cyan down 12 per cent after big loss and revenue delay

Heavy cash burn, a substantial loss for the year and a delay in gleaning vital revenue from a major contract forced shares in Cambridge fabless chip company Cyan Holdings plc down almost 12 per cent to 24.25p.

Heavy cash burn, a substantial loss for the year and a delay in gleaning vital revenue from a major contract forced shares in Cambridge fabless chip company Cyan Holdings plc down almost 12 per cent to 24.25p.

AIM-listed Cyan, which specialises in the development of low powered, configurable microcontroller chips, suffered a net loss of £2.086 million in the year to December 31.

The company raised £6.1m on float on December 7 but within three weeks cash was down to £5.5m.

Chief executive Paul Johnson had said that proceeds would be largely applied to continue the product development programme, to fund an increased sales effort and fund working capital as customers’ production quantity orders were received during 2006 and 2007.

In the event, turnover was only £29,899 (2004: £12,116).

Cyan attributed the year’s loss to “the set-up stage of the company and the nature of its products.”

The phoenix company was actually re-established in January 2003 when Johnson and former CTO, Chris Davies bought Cyan’s IP and certain assets when the business was in liquidation. It had folded after failing to raise £5m in lifeline venture capital.

At the time it floated, Cyan’s current largest customer had committed to an initial order of 100,000 units of the eCOG1k microcontroller and Cyan estimated it would begin shipping the same month. 

But the company now reports that delays with the roll-out of tax control POS terminal products in China have led to a rescheduling of the drawdown on this order.

It will now be dispatched over April, May and June 2006, says Cyan, which says it expects further orders for this customer for delivery in the second half of 2006.

The revised shipping schedules will mean that an estimated three months of anticipated sales from 2006 will slip into 2007 – potentially hitting 2006 budgeted sales.

“2006 will still be our first year of volume sales,” says Johnson. Cyan also reached the milestone of 100 design wins by this month, although the company cautions that: “There is of course no guarantee that any design win will result in a significant order but Cyan believes that the quantity and quality of the design wins within its portfolio means that such an eventuality is likely.”  

Cyan also reports “significant product development on eCOG1X” and has strengthened its distribution channels in Asia and Europe.

Cyan says it is now making rapid progress in its strategy of providing ultra low power and low power, high performance, 16 and 32 bit microcontrollers supported by what it believes to be “unique integrated software development tools.”

The company is now moving into the production phase of its business and setting up a manufacturing operations group. Production orders for silicon wafers have been placed with Taiwan Semiconductor Manufacturing Company (TSMC), its silicon wafer manufacturing partner, to satisfy production orders from existing customers.

Cyan says it has identified Europe and South East Asia as the largest markets for its products and aims to have 1 per cent of the microcontroller market within 5 years.

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