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[Keyser Soze]

Buy CSR (CSR:xlon)

Entry Range 695-705

Stop (Loss)667

Arguments

1 We believe CSR is a turnaround story for 2007. It’s well positioned in the Bluetooth arena but the stock was hit hard last year and is therefore trading at interesting multiples. What's more, we see CSR as an appealing buyout target, not least considering the acquisitions seen thus far within technology.

2 On March 15th, Nokia, which uses CSR chips in its phones, was accused of infringing on four patens for technology sold under "Bluetooth" name in the US. The lawsuit was brought forward by Washington Research Foundation but CSR and others quickly announced that the suit was "without merit". Regardless, the stock traded considerably lower following this development but the chart continues to clear up after a lackluster 2006. In our opinion, the suit won't impact CSR in any way and thus the recent pullback offers a buying opportunity.

3 In our Yearly Outlook 2007 ( http://www.saxobank.com/data/files/Anal ... ok2007.pdf ) we examined probably buyout targets in both Europe and the US. All components withing Russell 1000 and Euro Stoxx 600 were ranked using several key metrics that buy-out funds deem important. As it turned out, CSR emerged as the premier buyout candidate among all the European names that we examined. This should provide a cushion to CSR in both the short- and medium term.

Risk

Main risk to this strategy is potential negative news flow on CSR, especially related to lawsuit mentioned above.