CMC expects NT$3bn profit this quarter

CMC Magnetics Corp (中環), the world's biggest maker of recordable discs used in DVD players, said it expects a record quarterly profit of NT$3 billion (US$90.1 million) on strong demand.

"The slow season this year won't be slow," CMC chairman Bob Wong (翁明顯) told reporters in Taipei. "And we're very upbeat about this year, especially the DVD segment."

CMC's February profits are expected to hit a new high of NT$1.5 billion, Won said. "March will be another profitable month," he added.

CMC Magnetics posted a NT$406.6 million profit in the first quarter a year ago. It forecasts net income this year to grow by about 50 percent after making a profit of about NT$6.3 billion last year, Wong said.

CMC Magnetics will maintain a gross margin of about 50 percent for "several years" by investing more than rivals in production of new recordable DVD standards, he said.

"The price decline will not hurt the gross margin as it is the result of huge cost savings. In some items, we can even save three-fourths of the cost," Wong said in attempt to ease investors' worries about price plunges eroding profits.

He predicted the price to fall further, but said the drastic price decline would make it even more difficult for entrants to compete with major players.