Sat, Jan 08, 2011 - Page 12 News List

MediaTek fourth-quarter sales plunge nearly 20%

By Kevin Chen  /  Staff Reporter

MediaTek Inc (聯發科), the nation’s largest handset chip designer and the world’s second-largest after Qualcomm Inc, saw its fourth-quarter revenue drop 19.5 percent from the previous quarter due to price cuts amid intensifying market competition.

Consolidated revenue for the fourth quarter totaled NT$22.68 billion (US$761 million), compared with NT$28.18 billion in the third quarter, it said in a statement.

The sequential decline of 19.5 percent in revenue was in line with the company’s guidance.

MediaTek president Hsieh Ching-jiang (謝清江) told investors at a teleconference on Nov. 1 that he expected last quarter’s sales to decrease by 15 to 20 percent from the previous three months to a range of NT$22.5 billion to NT$24 billion.

The company also reported that sales last month dropped 15.1 percent to NT$7.94 billion from NT$9.36 billion a year earlier. However, on a monthly comparison basis, sales were up 7.9 percent from November’s NT$7.361 billion.

Citigroup analyst Kevin Chang (張凱偉) said MediaTek’s unusual monthly sales growth last month could have been driven by an order pull-in to meet demand for the Lunar New Year, which falls on Feb. 3 this year (compared with Feb. 14 last year).

As price competition in the 2.5-generation and 2.75-generation cellphone chipset markets, especially in China, is expected to intensify, while sales contribution from Android phones could be lower than expected, Chang was cautious about MediaTek’s near-term outlook and expected sales this month to drop.

“If demand does not appear to be strong in the first week of January and orders stop in the last week of January, we believe that January sales will very likely trend down month-on-month,” Chang said in a client note.

For the whole of last year, the Hsinchu-based company posted NT$113.46 billion in revenue, down 1.56 percent from NT$115.27 billion in 2009, the company’s statement showed.

MediaTek yesterday did not offer a guidance for last year’s net profit, nor its outlook for this month and the first quarter.

The company is expected to disclose the information to investors at a teleconference later this month.

Shares of MediaTek plunged 5.11 percent to close at NT$390 on the Taiwan Stock Exchange yesterday after the release of its latest sales results.

Citigroup recommended a target price of NT$243 for MediaTek, down from its previous target of NT$284, while Deutsche Bank maintained its target at NT$316, with a “sell” rating.

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