United Microelectronics Corp (UMC, 聯電), the world's second-largest made-to-order chipmaker, said last year's loss under the US Generally Accepted Accounting Principles was three times more than originally reported because of accounting errors. Its stock fell yesterday.
The NT$14.2 billion (US$424 million) loss was revised from a NT$4.7 billion shortfall because of erroneous assessments of charges, goodwill, share bonuses and derivatives, the company said yesterday in a statement. UMC's results for last year under Taiwanese standards -- a profit of NT$32 billion -- will not be restated.
UMC's shares closed 4.3 percent lower at NT$17.90, after dropping as much as 6.4 percent. The firm's largest rival Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) fell 1.5 percent to NT$61.10.
The TAIEX closed down 25.83 points, or 0.41 percent, at 6,235.35, as weakness in UMC reversed early gains driven by Wall Street's overnight strength, dealers said.
UMC's shares had their biggest drop in seven weeks as investors sought a better explanation for the discrepancy between the two sets of earnings. The stock has dropped 3.7 percent this year.
"I don't know exactly what happened based on the information the company released," said Kevin Yang (楊師銘), a fund manager at International Investment Trust Co (國際投信). "It's rare and a huge revision for 2004's figure -- the company should have enhanced its transparency."
Last year's earnings revision was mainly due to the discrepancy in goodwill calculations on long-term investments, Liu Chi-tung (劉啟東), chief financial officer, said in a telephone interview.
UMC's third-quarter profit fell 80 percent to NT$2.2 billion from a year earlier. The company said on Oct. 26 that it expects its manufacturing capacity to reach 85 percent in the current quarter, from 78 percent in the previous three months.
"The most affected would be foreign institutional investors as they refer to financial reports based on the US accounting standards and have been involved actively in ADR trading," Yang said.
UMC also revised earnings for 2003 and 2002. Profit in 2003 will be changed to NT$12.3 billion from NT$10.5 billion, while 2002 earnings will be cut to a loss of NT$222 million, from a NT$294 million profit. The restatements don't affect UMC's current or future cash payments, it said.
"The company should explain more clearly to investors the exact cause of the revision to avoid doubts about its books," said Tracy Chen of PCA Securities Investment Trust Co (