E Ink Holdings Inc (元太科技), which manufactures the displays used in 90 percent of the world’s e-readers, including Amazon’s Kindle series, posted a weaker profit of NT$1.26 billion (US$42.6 million) for the fourth quarter of last year because of increased shipments of lower-margin LCD panels and product transition.
The figure was a decline of 33.26 percent year-on-year and a plunge of 43.12 percent quarter-on-quarter.
Revenue was NT$10.49 billion, up 8 percent year-on-year, but down 4 percent quarter-on-quarter.
The decline in profit was because of the higher shipments of fringe field switching (FFS) LCD panels, which offer lower margins than the company’s flagship product — e-paper — E Ink chairman Scott Liu (劉思誠) said at an investors’ conference yesterday.
For the whole of last year, profit rose 62 percent to a record NT$6.53 billion, or NT$6.05 per share.
Total revenue last year was NT$38.43 billion, up 53 percent from 2010.
Liu said this year would be a “challenging year full of uncertainties,” mainly because of the possible fallout from the unresolved eurozone debt crisis.
“Clients are conservative and said the market visibility is low,” he said, adding that E Ink would no longer provide shipment targets or projections in a response to clients’ requests.
However, he said that revenue would bottom out in the seasonally slow first quarter as clients were digesting inventories.
According to Citigroup, the weaker revenue momentum in the first quarter was mainly because US clients had built up advanced inventory supplies early in the fourth quarter last year for the holiday season.
“However, we expect growth to resume as major brands will release new touch e-readers for the coming hot season in the third quarter this year,” a Citigroup report said last week said.
E Ink is set to benefit from the increasing adoption of FFS displays for smartphone and tablet applications, which will drive up the company’s earnings.
The proliferation of the non-Apple tablet market — Amazon’s Kindle Fire in particular — would potentially fuel the adoption of FFS panels and help revive E Ink’s LCD business, Citigroup said.