SPIL posts record-high Q4 earnings

Siliconware Precision Industries Co (SPIL, 矽品精密) yesterday posted record-high quarterly earnings mostly helped by non-operating gains, although the world's third-biggest chip packager said it expected operations to hit a relative low this quarter.

Net income rose 6.9 percent to NT$3.88 billion (US$117.7 million) in the fourth quarter last year, from NT$2.63 billion a year ago, a company statement said.

Non-operating income grew 39.4 percent year on year to NT$819 million, offsetting an annual 3.9 percent decline in operating income resulting from lukewarm shopping season demand, the Taichung-based company said.

"We will experience a mild correction in the beginning of this year. Then, business will grow gradually quarter by quarter," chairman Bough Lin (林文伯) told an investor's conference.

The operating margin was expected to drop to between 20 to 22 percent during the January to March period, from 23.1 percent last quarter, primarily owing to excessive customer inventory and falling prices, Lin said.

Revenues would drop 5 to 10 percent this quarter from last quarter's NT$14.77 billion, he said.

Crystal Lee (李懿薇), an analyst with ABN AMRO Asia Ltd in Taipei, expected SPIL to register double-digit growth in revenues next quarter, helped by new orders from customers including Qualcomm Inc and NVIDA Corp.

SPIL supplies chip packaging services to many of the world's biggest chipmakers, including US chipmaker Advanced Micro Devices Inc (AMD) and Taiwan's MediaTek Inc (聯發科技).

"We will closely monitor how Microsoft's new Vista operating system will spur PC demand," said Bill Lan (藍新仁), a deputy general manager at Allianz Global Investors Taiwan Ltd (德盛安聯).

SPIL is on Lan's investment portfolio.

Thirty-six percent of SPIL's revenues are generated by customers in the computer sector.

Lin said the effects of the launch of the Vista operating system would become more obvious in the second half, three to six months after it was introduced into global markets on Tuesday.

Overall, Taiwanese chip testing and packaging service providers were expected to report a moderate revenue growth benefiting from sustainable growth in global computer, handset and consumer electronics shipments, Lin said.

The annual growth rate, however, would dwindle to 10 percent this year from 28 percent last year, Lin said.

Last year, SPIL accumulated NT$13.33 billion, or NT$4.91 per share, in net income, making it the most profitable year in the company's 23-year history.

The annual results beat the expectations of most analysts, including ABN AMRO's Lee, who had forecast NT$12 billion in net profits for the year.

Lee upgraded SPIL to "buy" from "hold" at a target price of NT$64 based on 2.12 times its price-to-book ratio for this year.

The rate adjustment was also partly due to the potential delisting of bigger rival Advanced Semiconductor Engineering Inc (日月光半導體) in the wake of a buyout bid offered by private fund equity consortium Carlyle Group, Lee said in a report dated Jan. 23.

SPIL shares slid 3.02 percent to NT$54.6 yesterday.