At the opening of a press conference at the Taiwan Stock Exchange Corp (TSE) on the afternoon of Sept. 2, David Lu (
When Lu, 38, founder and former chairman of the scandal-ridden Infodisc Technology Co (
TAIPEI TIMES FILE PHOTO
He denied any wrongdoing but admitted a decision to invest in Mediacopy Texas Inc in the US had been a mistake. The company was forced to write off NT$4.28 billion (US$127 million) in losses this year related to the investment.
TAIPEI TIMES FILE PHOTO
From January to June, Infodisc reported a pretax loss of NT$4.31 billion, or net negative earnings per share (EPS) of NT$6.93, on revenues of NT$865 million. Last year, the pre-recorded DVD maker reported pretax profits of NT$193 million on revenues of NT$2.82 billion.
"I will take full responsibility for making the decision [to invest in Mediacopy] and resign as chairman," he said at the time.
Lu had actually resigned from his post a day earlier, after submitting the company's six-month financial report to the TSE.
Infodisc acquired Mediacopy in 2001 for US$100 million via a holding company, Infodisc Global Holdings Inc. The purchase was intended to help the company land pre-recorded digital versatile disc (DVD) orders from Hollywood studios, mainly Metro-Goldwyn-Mayer Inc.
Over the last four years, however, Infodisc has seen no earnings from Mediacopy, and has instead written off nearly NT$9 billion in losses related to the El Paso, Texas-based firm.
In the face of the losses, Lu vowed to reorganize Infodisc, implement job cuts at Mediacopy and consolidate overseas subsidiaries. Investor confidence began to weaken, however, amid these problems. Lu's failure to present solid proof to the Taiwan Stock Exchange of a US$77.75 million (NT$2.62 billion) investment in the Gold Target Fund, registered in the Cayman Islands, has further eroded investor trust.
More criticism and doubt came over Lu's failure to explain what happened to US$110 million the company raised in June 2002 from selling bonds convertible into its own shares.
Amid speculation about possible embezzlement and concerns over alleged insider trading, Lu defended himself at another press conference on Sept. 6, saying he was innocent. He also outlined plans to close offices in South Korea and Germany, and sell company properties valued at NT$3.5 billion to cover losses.
But Lu is also no stranger to allegations of securities fraud.
Great heights, spectacular fall
Smart and fluent in English, Lu's beginnings were not humble, but he is a self-made man.
Born in 1966, Lu is the son of Lu Tien-shih (
In those days, Tailung Steel dominated the local steel market and the Lu family was a well-known political powerhouse in Chungho, Taipei Country.
But Lu, after receiving business and public administration diplomas from the University of Southern California in 1986, refused to succeed to his father's wealth and steel kingdom.
Instead, targeting the market potential of CDs, which were well positioned to become a mainstream product, Lu established Infodisc with NT$250,000 in 1995.
Although Lu's academic background was not directly related to the high-tech industry, his daring and sophisticated social network helped him to secure huge orders from big-name customers.
In 1998, Infodisc obtained authorization from Warner Advanced Multimedia Operations to produce pre-recorded DVDs for Warner Brothers Records. The deal kick-started the boom in the nation's pre-recorded DVD business.
Infodisc's annual capacity rose to 15 million units, the highest in the industry.
The accomplishment made Lu one of Taiwan's most famous business tycoons. In June 2000 Infodisc's shares shot up to NT$512, just four months after debuting at NT$60 on the Gretai Securities Market in February of that year.
Crowned king of the market, Lu, at the age of 35, was selected as the youngest millionaire in the high-tech industry by the Chinese-language Business Weekly in 2001.
The luster soon faded. Infodisc's shares tumbled dramatically. Drastic fluctuations followed, and the volatility prompted suspicions of stock manipulation.
In 2001, Lu was indicted by the Panchiao District Prosecutors Office on allegations of insider trading. He was indicted for selling 7 million Infodisc shares before the company announced a downward revision to a financial forecast in 2000. The sale netted him about NT$1.2 billion.
In March last year, the Taiwan High Court found Lu guilty of the charges and sentenced him to one year and six months in jail, or a fine of NT$2.5 million, for insider trading. Lu has since filed an appeal.
In April last year, Lu was again indicted by prosecutors for insider trading, for which he allegedly raked in another NT$1.5 billion.
Prosecutors also claimed his wife and several close relatives had sold shares before the company announced a lowered financial forecast. Lu is now restricted from leaving the country and is under investigation.
The stock exchange, meanwhile, on Sept. 8 halted margin trading of Infodisc shares. Over the past two weeks the shares have plunged by the daily 7 percent down-limit. Shares were trading at NT$1.97 on the TSE on Friday.
Lu bristles at Infodisc being likened to Procomp Infomatics Ltd (
"We are not another Procomp," Lu said harshly to a packed room of reporters at the TSE on Sept. 6.
"All our operations are normal and the net value of our shares are still as high as NT$15 per share," he said.
The meeting had been required by regulators to clear doubts over the US$77.75 million investment in the Cayman Island registered fund. Lu told reporters that documents related to the investment had been filed with regulators, but regulators did not agree, and therefore halted margin trading of the share.
While Lu was chastizing the TSE and rejecting comparisons with Procomp, investigators were meanwhile searching his house and the company's headquarters for evidence -- much as they had done with Procomp's chairwoman Sophia Yeh (葉素菲) in late June.
Lu is facing yet another crisis. His 23 creditor banks may tighten lending after Infodisc bounced two checks totaling NT$28.5 million issued to Entie Commercial Bank (
Too much ambition
Speaking on Sept. 6, Lu said that his ambition should be blamed for the company's problems. He was referring to a decision to expand into the US, Germany, Japan and South Korea over a short period, and a failure to see that the market was becoming flooded with cheap Chinese competitors. Chinese makers have staged brutal price wars, eroding the huge profits of Taiwanese companies.
"My high self-esteem and arrogance were behind the biggest mistake of my life," Lu said.
The market for optical storage media products such as recordable compact discs (CD-Rs) and recordable DVDs (DVD-Rs) is very competitive and highly cyclical. Prices of DVD-Rs, which generate higher gross margins than CD-Rs, face pressure as manufacturers are continuing to expand capacity.
Similarly, Lu made another mistake by acquiring Mediacopy on the presumption that the US firm would help secure orders from Metro-Goldwyn-Mayer. The dream vanished after MGM decided not to extend its cooperation with Mediacopy earlier this year.
Infodisc invested heavily to stop the bleeding at Mediacopy, using the proceeds from selling convertible bonds to invest NT$6.7 billion in the company during the 2002-2003 period. Despite this, the subsidiary's market value was less than NT$350 million, according to a company filing to the TSE on Sept. 6.
When Infodisc was at its peak, Lu said the best thing he'd ever done was to make his company a success without a penny from his father.
Now, however, it seems he will need to draw on greater wisdom and courage to regain this success.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day