Thu, Nov 09, 2006 - Page 11 News List

Far EasTone Co predicts decline in its pre-tax profits

By Lisa Wang  /  STAFF REPORTER

Far EasTone Telecommunications Co (遠傳電信), the nation's second-largest mobile service provider, projected pre-tax profits would drop at a 6.4-percent quarterly pace in the current quarter amid stiff competition.

Pre-tax profits may amount to NT$3.51 billion (US$107 million) in the final quarter of this year, compared to NT$3.75 billion in the third quarter, the telecom company said in a statement to the Taiwan Stock Exchange on Tuesday.

The decline in pre-tax income was "primarily the result of a reduction in operating profits," Far EasTone said in the statement.

Operating profit would slide almost 10 percent to NT$2.27 billion this quarter from NT$2.49 billion in the third quarter, the company said.

For the full year, Far EasTone said net income may fall 10 percent to roughly NT$3.4 per share from NT$3.8 a share last year.

On an annual basis, the fourth quarter pre-tax income represented a 12.8 percent increase, compared to NT$3.11 billion in net income in the fourth quarter of last year.

Sales would rise slightly to NT$10.91 billion this quarter from NT$10.82 billion made last quarter, the company said.

Merrill Lynch retained a "neutral" rating on Far EasTone, but cut its earnings forecast for the firm by 2.4 percent for this year and by 5.5 percent for next year, saying Far EasTone's plan to step up promotions to boost its market share could erode its EBITDA margin. EBITDA stands for earnings before interest, tax, depreciation and amortization.

Far EasTone shares dropped nearly 2 percent to NT$37.55 yesterday, compared to a 0.09 percent decline in the TAIEX.

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