UPDATE 2-CSR Q1 loss narrows, revenue tops mkt estimates

* Sees sequential increase in Q2 revenue

* Q1 revenue $80.6 mln vs mkt est $76.8 mln

* Pretax loss $22.6 mln vs $44.2 mln a year ago

* Says merger with SiRF Technology on track (Recasts; adds executive, analyst comment, details)

By Purwa Naveen Raman

BANGALORE, May 6 (Reuters) - British Bluetooth wireless chip company CSR Plc (CSR.L) said first-quarter loss narrowed on tight cost controls and forecast a sequential increase in second-quarter revenue.

CSR, which makes single-chip Bluetooth wireless devices, said it was confident of the future, helped by design wins across all customer groups in its handset business.

Pretax loss was $22.6 million for the first quarter ended April 3, compared with $44.2 million in the year-ago period.

Revenue halved to $80.6 million, in line with the company's outlook, reflecting continued weak market demand and destocking for most business units.

Four analysts on average had forecast revenue of $76.8 million, according to Reuters Estimates.

Gross margin fell to 41.1 percent from 45.1 percent in the year-ago period due to a shift in product mix and fixed manuafacturing costs on a lower revenue base.

However, the company said it expected to reverse these factors going forward in the year.

"We would expect that they (gross margins) gradually return to normalised levels over the next several quarters and into 2010," Chief Financial Officer Will Gardiner told Reuters by phone. He said the normal level would broadly be mid-40 percent.

The company said during the first quarter, it saw relative strength from the handset market, but the headset market was "particularly weak".

"We do see sort of a stabilisation, which is good, specifically in the handset market," Chief Executive Joep van Beurden said by phone.

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