MediaTek Inc (聯發科) may consider a share buyback program to prop up its flagging share price, company chairman Tsai Ming-kai (蔡明介) said yesterday.
Speaking at the company’s annual general meeting, Tsai told reporters that in the wake of a recent sell-off by institutional investors, his company was mulling a share repurchase scheme to reverse the trend.
Hit by concern over the firm’s falling gross margin, MediaTek’s share price fell as low as NT$302 on Monday, its lowest level since hitting NT$293.50 in April 2009.
Yesterday, MediaTek shares closed unchanged at NT$304, off a high of NT$311 after a Daiwa Securities report said the stock could benefit from the company’s launch of 3G handset chips.
NT$300
While Tsai did not elaborate on the likely buyback plan, market observers said the company seemed intent on supporting its share price above the NT$300 mark.
However, investors are likely to focus more on how the company plans to improve its gross margin and strengthen its bottom line rather than pay attention to such short-term incentives as a buyback program, analysts said.
Acer Inc (宏碁), one of the world’s leading personal computer vendors, failed to boost its share price through a share buyback scheme launched early this month, when market sentiment was hurt badly by the company’s massive write-off to clear its inventory and accounts receivable at its EMEA — Europe, Middle East and Africa — operations.
Faced with cutthroat price competition in China’s mobile phone chip market, MediaTek saw its first-quarter gross margin fall 3 percentage points from the previous quarter to 46.2 percent.
Cellphone chips account for more than half of the company’s total sales and China’s unbranded handset makers are its major buyers.
Tsai said MediaTek aims to broaden its product line by strengthening development of TV and WiFi connection chips.
TECHNOLOGY LEAD
Tsai said that after adjusting its business strategy over the past year, the company’s products — in particular chips used in consumer electronics goods — were once again gaining market share.
Given its wide range of products, the company still commands a lead in technology over its peers and remains competitive in the global IC design business, Tsai said.
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