Earnings report may not be enough to maintain foundering share value

Although earnings reports from one of Taiwan's largest electronics companies came as a relief to some investors who feared poor earnings by US computer makers may impact Taiwan's economy, analysts said it may not be enough to save the company's rapidly declining share value.

Taiwan Semiconductor Manu-facturing Co (TSMC, 台積電) reported better than expected earnings as net income rose to NT$20 billion (US$617 million) in the third quarter, which ended Sept. 30, higher than analysts predictions of NT$18.5 billion.

The news, however, may not be enough to save the company's falling stock price.

Although analysts called the earnings report great for the company and predicted TSMC should meet fourth quarter expectations, it would take "a big buy order" to halt the slide of the company's stock, according to David Tung (童大偉), international department manager at EnTrust Securities (永昌綜合證券).

He said the earnings report should bring in heavier buying activity from foreign investors which could "at least hold the stock price in place."

Shares from the company fell NT$6 to a year-low of NT$81.5 with heavy selling pressure left at the end of the trading day. The Taiwan stock market's main index fell to it's lowest point in over four years as margin calls forced investors to sell shares to cover loans.

TSMC said its sales volume grew to 942,000 wafers from 697,000 in the second quarter. The percentage of chips made for consumer electronics rose 5 percent from the second quarter. TSMC vice president Harvey Chang (張孝威) attributed this rise to increased demand for chips used in DVD and video CD players made by Japanese companies.