Fri, Jul 29, 2011 - Page 11 News List

Powertech’s net income declines 6 percent in Q2

By Kevin Chen  /  Staff Reporter

Giving a cautious outlook, Powertech Technology Inc (力成科技), the nation’s biggest computer memorychip packager, yesterday said net income in the second quarter fell 6.19 percent from a year earlier.

Second-quarter net income of NT$1.86 billion (US$64.6 million) was 11.56 percent higher than the previous quarter, company data showed.

The Hsinchu-based company said in a filing to the Taiwan Stock Exchange that earnings per share were NT$2.56 in the second quarter, compared with NT$2.25 in the first quarter and NT$2.82 a year earlier.

The company’s gross margin of 24.6 percent in the second quarter was slightly higher than the 24.5 percent in the first quarter, but down from the 28 percent reported in the same period of last year.

Consolidated sales in the second quarter totaled NT$10.26 billion, up 10.53 percent year-on-year and 5.19 percent quarter-on-quarter, thanks to strong packaging and testing demand for NAND flash memory and mobile DRAM, the company said.

Powertech shares closed unchanged at NT$89.1 yesterday on the Taiwan Stock Exchange, ahead of the release of the firm’s quarterly results, because investors were cautious about what outlook it would provide in light of a recent slump in the DRAM industry.

Powertech chairman Tsai Tu-king (蔡篤恭) told investors yesterday that the inventory adjustment would continue for a while, because slowing PC sales have driven down memorychip demand and significantly depressed chip prices in the past two months.

“The inventory adjustment in the DRAM sector is likely to take another three to six months,” Tsai was quoted as saying by cable network UBN. “Some of our DRAM customers told us that they have decided to cut output by up to 20 percent in the third quarter, which will also impact on our sales in the quarter.”

Powertech will face a challenging third quarter, Tsai said, adding that he was conservative about the second-half outlook.

The company said it expects revenue to drop by around 5 percent in the third quarter, while gross margin would fall to between 21.5 percent and 22.5 percent, from 24.6 percent in the second quarter.

“The situation in the DRAM sector this year is no better than that in 2008,” UBN quoted Tsai as saying, “We hope to see a recovery in the sector following six months of inventory adjustment.”

The firm retained its capital expenditure at between NT$10 billion and NT$12 billion for the year.

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