Wed, May 15, 2013 - Page 13 News List

E Ink slides back to loss

E-READERS:Slack demand hit sales in the first quarter, but the firm expects a pickup in the second half after customers clear out inventories and launch new products

By Lisa Wang  /  Staff reporter

E Ink Holdings Inc (元太科技), which supplies e-paper displays for Amazon.com Inc’s Kindle e-reader series, swung into a quarterly loss again after a brief turnaround as demand for e-readers slumped, a company executive said yesterday.

E Ink is now pinning its hopes on an increase in demand in the second half of the year when its customers launch new e-readers, chief executive officer Eddie Chen (陳彥松) said.

Commenting on Amazon.com’s recent acquisition of Samsung Electronics Co’s display unit, Liquavista, Chen said he did not expect the deal to have an imminent and adverse impact on E Ink, citing the challenges of turning out large volumes of colored e-paper displays.

Reports suggest that the Liquavista acquisition will pave the way for Amazon to launch color-screen Kindle e-readers.

In the first three months of this year, E Ink lost NT$492 million (US$16.45 million), compared with a net profit of NT$1.09 billion in the final quarter of last year following three quarters in the red. Compared with the same period last year, losses shrunk from a net loss of NT$787 million.

“Demand for e-readers dwindled in the first quarter, which was a slack season, while lower-margin LCD business picked up slightly,” Chen told an investors’ conference in Taipei.

Chen said gross margin plunged to 5 percent last quarter, compared with 21.8 percent in the fourth quarter last year.

On an annual basis, that was an improvement from 1 percent.

Weakening demand last quarter may extend into this quarter as customers are still clearing e-reader stocks ahead of the launch of new models in the second half of the year, he said.

“I do not expect a rebound this quarter,” Chen said. “Revenue is likely to be flat, or even slide slightly in the second quarter.”

Revenue fell to NT$5.38 billion last quarter, from NT$10.8 billion in the fourth quarter last year.

“The second quarter is likely to be the bottom,” Chen said. “The company is confident that the growth momentum will return in the second half.”

E-paper displays are expected to account for more than 50 percent of the company’s overall revenue in the period between July and December, Chen said.

In a separate statement, E Ink said it had made a breakthrough in developing new technologies that will enable it to make 13.3-inch flexible displays in collaboration with Sony Corp.

The new displays are suitable for mobile devices, the company said. Most flexible displays currently available are for mobile phones.

E Ink shares tumbled 1.2 percent to NT$20.6 yesterday.

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