E Ink Holdings Inc’s (元太科技) shares plunged 6.84 percent yesterday after the world’s top e-paper display supplier cut the salaries of its high-ranking executives by up to 20 percent and requested some employees to take unpaid leave to weather an inventory-driven slump.
The stock price of E Ink fell for the third straight trading session to NT$28.6, hitting the lowest level in about three years.
The cost-reduction measures came after E Ink swung into a loss of NT$838 million (US$28.54 million) last quarter as its major client, Amazon Inc, was digesting excessive inventory during a product-transition period.
E Ink chairman Scott Liu (劉思誠) said last month that as sales were not as good as expected, the customer entered into an inventory-digestion period and this affected the firm’s first-quarter results.
At the time, Liu said he expected the first quarter would be the weakest quarter this year.
E Ink yesterday posted 2.96 percent lower revenue of NT$1.31 billion for last month, from March’s NT$1.35 billion. However, it was a 47.06 percent year-on-year decline from NT$2.47 billion.
To ride out the difficult period, E Ink requested local employees take an extra two days off a month this month and next month, while high-ranking executives would take a pay cut ranging from 10 percent to 20 percent, the company said in a filing to the Taiwan Stock Exchange.
About 500 employees, with the exception of factory workers, would be affected by the austerity measures, it said.
E Ink said this would be a short-term countermeasure and the company would restore normal working hours and usual monthly salaries in the second half of this year as client orders and shipments recover.
Liu told investors last month that the company’s customers are set to launch new products next quarter, which would stimulate their replacement demand and sales of E Ink’s products.
Credit Suisse downgraded E Ink to “neutral” on April 27, with the target price lowered to NT$32 from NT$45, based on weaker profits this year. Credit Suisse’s Jerry Su (蘇厚合) cut his forecast of E Ink’s net profit this year to NT$2.25 billion, from a previous estimate of NT$4.68 billion, as E Ink could continue in the red this quarter.
“We will stay on the sideline until revenues and margins show a meaningful pick-up later this year,” Su said in a report.
Gross margins for e-paper display and high-resolution LCD panels were expected to be under pressure because of growing competition in the second half, he said.
Separately, Chimei Innolux Corp (奇美電子), the nation’s biggest LCD panel maker, yesterday said revenue dropped 11.4 percent to NT$36.14 billion last month, from NT$40.79 billion in March, according to a company statement submitted to the Taiwan Stock Exchange.
Chimei joined local rivals, including AU Optronics Corp (友達光電), in reporting a monthly decline in revenue.
Shipments of PC and TV panels dropped 10.6 percent month-on-month to 11.15 million units, the company said. Shipments of smaller panels for handsets and tablets were down 9.5 percent to 31.43 million units last month, from 34.72 million the prior month.
On an annual basis, revenue shrank 10.3 percent last month from NT$40.29 billion. Shipments of PC and TV panels and small panels increased 1.09 percent and 6.36 percent.