Wed, Feb 06, 2013 - Page 14 News List

Powertech makes up for not meeting expectations

NET INCOME DOWN:Powertech’s revenue and profit fell last year, but the company chairman predicts this will improve and has offered higher dividends to investors

By Helen Ku  /  Staff reporter

Powertech Technology Inc (力成科技), the nation’s largest computer memory chip packager, yesterday posted a 11.5 percent drop in net income for last year due to a decreased capacity utilization rate.

The company forecast that revenue and profit in the current quarter would remain challenging because of customers’ inventory adjustment and seasonal factors, but it expected business would recover in the second quarter due to reduced DRAM supply.

“Powertech has been working hard to improve its sales over the past year, but still could not meet investors’ expectations,” Powertech chairman Tsai Du-kung (蔡篤恭) told a quarterly conference, adding that the worst is over and the company’s sales would pick up next quarter.

Last year was challenging, because more companies were withdrawing from the DRAM market and shifting to chips used in mobile devices, Tsai said.

He apologized to investors for not being able to lift earnings per share (EPS) and announced that to make up for their losses, Powertech will increase its dividend payout ratio this year to 70 percent from about 40 percent in the past.

Powertech posted EPS of NT$4.63 last year, down 21.9 percent from NT$5.93 in 2011.

The company, which counts Japan’s Elpida Memory Inc and Toshiba Corp, as well as Kingston Technology Co of the US, among its customers, said though its sales grew 5.5 percent to NT$41.61 billion (US$1.41 billion) last year from NT$39.45 billion in 2011, net income shrank 11.5 percent due to an increase in the cost of goods sold and its operating expenses.

On a positive note, the company’s net income for the October-to-December quarter last year grew more than threefold to NT$716 million from a net loss of NT$307 million during the same period in 2011, representing a 7.4 percent increase from NT$773 million net profit the previous quarter.

Revenue and profit are expected to expand beginning next quarter when the utilization rate increases, Tsai said.

Powertech’s DRAM packaging utilization rate is currently between 50 and 60 percent, much lower than the 90 percent reached during last quarter, while NAND flash memory utilization rate is about 84 percent and is expected to break 90 percent next quarter, Tsai added.

As global market demand for mobile devices, such as smartphones and tablets, is increasing, demand for logic devices is expected to also continue growing this year, driving up the company’s sales, he said.

Last year, the company’s capital expenditure was about NT$7 billion and the number is expected to be at the same level this year, with the major investment in NAND flash and new technology business, he added.

Currently, DRAM packaging accounts for 48 percent of the company’s revenue, followed by NAND flash memory at 31 percent and logic devices at 21 percent.

Powertech’s shares closed down 4.88 percent at NT$44 in Taipei trading yesterday ahead of the beginning of its quarterly conference, underperforming the broader market, which fell 0.46 percent.

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