Shares of AU Optronics Corp (AUO, 友達光電) plunged yesterday after the firm said it would sell overseas convertible bonds to raise US$800 million and warned that its third-quarter operations would be significantly weaker than the second quarter because of price declines.
Shares of the nation’s No. 2 LCD panel maker dipped 3.91 percent to NT$30.70. Bigger rival Chimei Innolux Corp (奇美電子) tumbled 4.53 percent to NT$41.05 on the Taiwan Stock Exchange.
AUO said in an -exchange filing that some panel prices have fallen below its cost level, which would incur inventory losses and thereby have an adverse impact on its third-quarter profits.
The Hsinchu-based company also said it expected the -European Commission to release this month at the earliest the results of its investigation on price-fixing among the world’s major LCD panel makers, including AUO.
Yesterday, AUO appointed former financial chief executive Max Cheng (鄭煒順) as the acting president because president and chief executive Chen Lai-juh (陳來助) is barred from leaving the US, along with other high-ranking AUO officials.
Cheng currently serves as chairman of the Tokyo-based M. Setek Co, in which AUO has a 90 percent stake.
“We expect a drastic decline in profits for LCD panel makers as price declines are across the board. The price for monitor panels, in particular, have dropped below cost,” said Roger Yu (游智超), an analyst with Polaris Securities Co (寶來證券).
AUO is expected to eke out profits of NT$0.46 per share, down 63 percent from NT$1.24 a share in the second quarter, Yu said that, “I won’t be surprised if AUO swings to losses again as the market situation was unclear in the third -quarter and the forecast for the fourth quarter is also vague, even though it looks as though the price will rebound.”
In the filing, AUO said it has obtained approval from the Financial Supervisory Commission to sell US$800 million worth of convertible bonds at zero coupon rates to finance its capacity expansion.
Bond holders will be able to convert the bonds into the company’s common stocks at NT$40.74 per share, when the bonds are due to mature in 2015, representing a 27.5 percent premium from an -average of NT$31.95 in the first 10 trading days of this month.
Separately, Chimei Innolux said last month’s sales rose almost 0.1 percent to NT$45.57 billion, from NT$45.54 billion in August, bringing third-quarter revenues to NT$137.05 billion, down 5.24 percent from the second quarter’s NT$144.63 billion.
In the third quarter, shipments of PC and TV LCD panels dropped 9.7 percent quarter-on-quarter to 31 million units, despite a rebound of 6.8 percent in shipments last month to 10.5 million units last month from a month earlier.
In August, Chimei Innolux told investors that shipments would be little changed in the third quarter compared with the second quarter.
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