Thu, Nov 01, 2012 - Page 13 News List

E Ink posts third straight loss due to bad product mix

PAPER WEIGHT:The No. 1 e-paper supplier’s LCD products posted a gross loss, dragging down the firm’s profitability despite posting NT$7.6bn in sales

By Amy Su  /  Staff reporter

E Ink Holdings Inc (元太科技), the world’s biggest e-paper display supplier, yesterday reported its third consecutive quarterly loss during the July-to-September period on the back of an unfavorable product mix.

However, the company said it has clear visibility of orders of e-paper displays — E Ink’s major profit source over the next two years — which would provide earning momentum for the fourth quarter and the first quarter of next year.

The consolidated net loss totaled NT$234 million (US$7.99 million), or a loss per share of NT$0.21, in the third quarter, compared with a net profit of NT$2.25 billion, or NT$2.08 per share, recorded in the same period last year, the company said.

On a quarterly basis, the figure was an improvement on a net loss of NT$818 million, or a loss per share of NT$0.76, recorded in the second quarter, data showed.

E Ink, which counts Amazon Inc as its No. 1 customer, posted NT$7.6 billion in consolidated sales in the quarter between July and September, up a significant 70 percent from the April-to-June period, leading market researchers to expect a profit-making third quarter.


However, the company’s unbalanced product mix focused too much on LCD products — which created a gross loss for the company — dragged down its profitability.

“The sales proportion of LCD products still stood higher than expected for the third quarter by accounting for about one-third of the company’s overall revenue,” E Ink chairman Scott Liu (劉思誠) told an investors’ conference.

During the same period, e-paper display products made up the remaining two-thirds of the company’s sales, the company chairman added.

That made gross margin stand at 5.8 percent in the third quarter, up from the 0.4 percent posted in the second quarter, but down from 35.4 percent recorded in the third quarter last year, company data showed.

However, after a major client began to experience strong demand for e-paper display products from late on in the third quarter for its new e-book reader, Liu said the company’s product mix may further improve in the fourth quarter, raising gross margin and profitability.

In the first nine months of the year, the e-paper supplier reported a net loss of NT$1.84 billion, or a NT$1.7 loss per share, company statistics showed.

E Ink Shares suffered a heavy decline yesterday ahead of the investors’ conference, closing 5.81 percent lower at NT$23.5.

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