Shares in Powertech Technology Inc (力成), a memorychip packaging and testing service provider, appeared resilient despite steep drops seen across the broader market yesterday after the company came up with a share buyback program on Thursday, dealers said.
The plan is aimed at propping up Powertech’s share price, which has come under tremendous pressure since its biggest customer, Japanese chip maker Elpida Memory Inc, sought financial restructuring in late February, they said.
Shares of Powertech rose 1.07 percent to close at NT$56.80 with 13.76 million shares changing hands, while the TAIEX ended down 1.10 percent.
Since Elpida filed for bankruptcy protection with the Tokyo District Court on Feb. 27, shares of Powertech had fallen more than 20 percent before yesterday’s rebound.
Powertech announced the buyback on Thursday and will purchase a total of 20 million shares on the open market at a price of between NT$50 and NT$70 over two months. The company said it will spend up to NT$1.4 billion (US$47.6 million) in the buyback in a bid to boost shareholder’s rights and reinforce its trustworthiness.
Grand Cathay Securities (大華證券) analyst Mars Hsu (徐振家) said the impact of Elpida’s woes on Powertech shares had been reduced to some extent, but the Taiwanese firm still had come up with the share buyback program at the request of certain shareholders.
“Powertech has lots of cash on hand. It’s not at all hard for the company to meet its shareholders’ demands,” Hsu said.
Powertech recorded NT$13.83 billion in cash and cash equivalent at the end of last year, up from NT$11.05 billion registered at the end of 2010, according to the Taiwan Stock Exchange.
Market analysts said investors should keep a close eye on the ongoing talks on a possible buyout of Elpida by US-based Micron Technology Inc since the outcome is likely to be a factor in Powertech’s future operations.
Meanwhile, shares in PC vendor Acer Inc (宏碁) edged down 0.62 percent to NT$32 yesterday after the company posted a 20 percent month-on-month decline in unconsolidated sales for last month.
“The sell-off showed weak market confidence in Acer’s earnings outlook, particularly after the company reported a big drop in April sales,” Concord Securities (康和證券) analyst Henry Sun (孫豪志) said.
On Thursday, Acer reported NT$25.27 billion in unconsolidated sales for last month, compared with NT$31.75 billion recorded in March. Last month’s figure was down about 11 percent from a year earlier.
In the first fourth months of this year, Acer recorded NT$121.76 billion in unconsolidated sales, down 6.74 percent year-on-year.
Sun said the market had expected the PC business to leave behind the slow-season effects seen in the first quarter and improve for the rest of the year.
“However, Acer’s latest sales data indicated that the pace of recovery remains slow,” Sun said. “Acer in particular needs time to adjust its product portfolio after its massive write-down to clear its inventory last year.”