Tue, Feb 15, 2011 - Page 12 News List

MStar posts big jump in fourth-quarter earnings

GROWING:The company says that it is planning to unveil a full range of new chips this year as it seeks to catch up to rival firms such as MediaTek Inc

By Lisa Wang  /  Staff Reporter

MStar Semiconductor Inc (Cayman) (開曼晨星半導體), the world’s biggest chipmaker for flat-panel TVs, yesterday said fourth-quarter earnings jumped 64 percent from a year ago on growing demand for its chips and its expansion into handset chips, primarily in China, to compete with Mediatek Inc (聯發科).

Net earnings expanded to NT$1.56 billion (US$53 million), from NT$948 million in the fourth quarter of 2009, according to a company statement, bringing last year’s total net profits to NT$6.52 billion, or NT$14.69 per share, up 35.5 percent from NT$4.82 billion, or NT$14.1 a share, in 2009.

On a quarterly basis, fourth quarter net income fell nearly 9 percent from NT$1.71 billion in the third quarter, after customers started reduced inventories following the Christmas shopping season, MStar said.

REASSURANCE

To ensure investors’ of the company’s growth potential, MStar co-founder and chairman Wayne Liang (梁公偉) told an investor conference its TV chips business would outgrow the industry average by between 10 percent to 15 percent annually this year.

“Our customers are gaining market share and we will grow along with them,” Liang said.

This quarter, revenues would be flat, or increase 6 percent, from US$1.07 million, Liang said, adding that TV chips accounted for 70 percent of the last quarter’s revenues.

Gross margin is expected to improve to 43 percent in the current quarter, from 41.2 percent last quarter.

“Forecasts from our customers indicate that the first quarter will be a stable period, as the first and second quarters are usually the seasonal slow periods,” Liang said.

MStar, which tapped into the mobile-phone chips business last year, plans to unveil a full-range of new chips this year to catch up with rivals such as MediaTek.

THIRD-GENERATION

The chip designer is set to launch its first third-generation chips used in feature phones next quarter and it expects its new chips to be used in smartphones running on Android as well as other operating systems in the fourth quarter, Liang said.

Shipments of mobile phone chips would surge between 40 percent and 50 percent this quarter from last quarter, Liang said. He declined to provide detailed figures.

AS EXPECTED

Eric Chen (陳慧明), a semiconductor analyst with Daiwa Capital Marktets, said MStar’s fourth--quarter results and outlook for the first quarter matched his expectations.

However, he had concerns about the company’s liquidity because about 15 percent of MStar’s shares could potentially be put on the market next month following the close of a lock-in period.

Shares of MStar advanced 3.42 percent to NT$242 yesterday, outperforming the benchmark TAIEX, which rose 0.88 percent. MediaTek shares rose 0.87 percent to NT$348.

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