MediaTek Inc (聯發科), the nation’s largest handset chipmaker, said yesterday fourth-quarter earnings more than tripled from a year ago amid recovering demand for consumer electronics.
Some analysts expressed disappointment, however, pointing to the sequential drop in quarterly earnings.
Last quarter, MediaTek earned NT$8.75 billion (US$273 million), a substantial rise from NT$2.88 billion a year ago. On a quarterly basis, however, earnings were down about 26 percent from a two-year high of NT$11.8 billion in the previous quarter because of slowing demand in China after the holiday shopping season in October.
Last quarter’s earnings were lower than the NT$9.3 billion and NT$9.4 billion estimated by Citigroup and Fubon Securities Investment Services Co (富邦投顧) respectively in the face of mounting pricing pressure.
Because of escalating competition, MediaTek’s gross margin is expected to fall further to between 56 percent and 57 percent this quarter, from 58.7 percent in the final quarter of last year, company president Hsieh Ching-jiang (謝清江) told investors yesterday.
“Pricing pressure for both new and old products is very heavy ... because of the large number of competitors,” Hsieh said.
MediaTek has to downwardly “adjust [its] average selling price to cope with market competition,” company financial executive Yu Mingto (喻銘鐸) said.
Fubon analyst Kenneth Lee (李克揚) said MediaTek’s first-quarter gross margin guidance was lower than his forecast of 58.1 percent for the first quarter.
Slower-than-expected expansion in demand for new chips — including those supporting China’s TDSCDMA and WCDMA 3G technologies — could be a major reason, Lee said.
Lee, however, remained positive on MediaTak, maintaining a “buy” rating on the stock with a target price of NT$700, implying a 39 percent upside over the next 12 months from the stock’s closing price of NT$505 yesterday.
“It would be foolhardy to sell the stock now,” Lee said, citing strong shipment forecasts for cellphone chips this year.
MediaTek said shipments of handset chips could grow 29 percent to 450 million units this year from 350 million last year, with new chips accounting for about 5 percent of the total.
MediaTek supplies handset chips mostly to Chinese mobile phone makers and some global brands such as Motorola Inc and LG Electronics.
The Hsinchu-based handset chipmaker expected revenues to hold steady or grow by 5 percent in the current quarter to NT$30.6 billion at the most, from last quarter’s NT$29.1 billion, with between 70 percent and 75 percent coming from mobile phone chips.
“Customers are placing orders aggressively ahead of the Lunar New Year [holiday shopping season]. In general, they are optimistic [about prospects],” Hsieh said.
For the full year, MediaTek nearly doubled its net income to NT$36.71 billion last year, from NT$19.19 billion in 2008.
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