The downgrade, its second in a month, sent shares in the maker of audio processing chips down 10.7 per cent to a 15-month closing low.
The company reported second-quarter revenue of £23.6m, up seven per cent on last year but missing analyst forecasts of £25m. Operating losses widened to £1.8m from £800,000 a year ago.
It said its third-quarter revenue would be in the range of £23m to £27m, sharply below consensus of £31m.
The group will cut spending by about £3.7m a year, at a one-off cost of £2.15m, by reducing research on replacements for some older products not related to its main audio range, Hickey said.
Chief executive Mike Hickey said: “The company is increasingly cautious about the challenging near-term consumer electronics environment.
“There has been a sharp reduction across a wide base of customers in their near-term forecasts.”
Wolfson said its full-year revenue will grow by less than 10 per cent, missing analyst expectations which had already been downgraded to about 13 per cent.
The firm, which supplies Blackberry-maker Research in Motion, Samsung and LG, said it was being hit by slower-than-expected launches of products such as tablet computers, derailing its long-term recovery plan after being ousted from Apple products in recent years.
Its chips have been designed into many of the smartphones and tablet PCs launched to challenge Apple, but Hickey said production numbers were low due to muted demand from consumers.
Analysts at Espirito Santo Investment Bank said that while the group’s second-quarter results were in line, the outlook was disappointing. They said that the results show Wolfson is struggling to translate design wins into revenue.