Sat, Nov 25, 2000 - Page 17 News List

Microelectronics to gain from 3G boom

TELECOMS By building the components that make up the infrastructure for third generation mobile services, the supplier looks set for solid profits next year

By Thomas Ker  /  CONTRIBUTING REPORTER

Microelectronics Technology Inc, a major telecommunications equipment supplier whose customers include Lucent Technologies Inc and Hughes Network Systems, predicted a bumper year next year as it benefits from its position as a provider of the infrastructure required to turn third generation mobile services and applications into a reality.

The company said at an investors meeting yesterday that revenue next year would continue to grow at a strong rate on the back of massive growth of broadband products and components. These would form the infrastructure to create a third generation services coverage map that would encompass remote areas, the corporate sector, as well as residential and small office areas.

Microelectronics was addressing investors at a briefing in which it formally released its raised financial target for this year, and explained its plans to exploit to the fullest the opportunities from the growth of broadband in the coming years during a meeting entitled "Developing the new 3G broadband century."

"We're confident about continuous revenue growth next year, especially from point-to-point or point to multi-point products such as LMDS or radios," said Joan Wu, director of corporate finance at Microelectronics. Local multipoint distribution services (LMDS) provide a point-to-multi-point broadband wireless access system. As expected, the company raised its revenue target for the year by 31 percent to NT$4.917 billion and its pretax income by 37 percent to NT$1.08 billion. It also raised its net income target by 31 percent to NT$944 million, or NT$3.01 per share -- above analyst estimates of NT$2.76 per share, according to Barra Global Estimates.

However, the wireless communications developer was most impressed by its operating income, which it raised by 53 percent over the original target, and 114 percent over last year's 1999 operating income, to NT$359 million. "We think this is the most remarkable readjustment," said Amy Ding, acting vice president at Microelectronics, who explained that a good cost control mechanism was behind the rise.

Ding also pointed out that Microlelectronics' high-profit-margin broadband access products would account for 18 percent of revenue this year, up from 5 percent last year. Meanwhile, the company was focusing less on lower profit margin products such as low noise block-down converters, which capture weak signals from broadcasting satellites to deliver sharper images on a TV screen.

Rather, the company would "focus on operational excellence to support targeted business growth," said Wesley Huang, president of Microelectronics. Those targets would include low-cost very small aperture terminals -- a satellite-based private communications network that can perform services such as electronic banking and point-of-sales transactions for global and remote areas, and further expansion into key 3G components.

While the company wasn't releasing any new products, analysts were still impressed. "These products don't deviate from previous products, but are involved more deeply in 3G," said an analyst at Sasson International Holdings Inc. "Microelectronics is in a very good position for 3G right now because wireless and Internet are going to be the hottest industries," he said.

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