Fri, Nov 08, 2013 - Page 14 News List

Elan Microelectronics’ profit falls 41%

NET PLUNGE:The firm blamed the drop on weak demand from notebook computer customers, but said it expected a bounce in March as customers reduce their stockpiles

By Lisa Wang  /  Staff reporter

Elan Microelectronics Corp (義隆電子) yesterday said sluggish demand for touchscreen notebook computers and price declines caused its net profit to decline 41 percent last quarter.

Net profit dropped to NT$275 billion, or NT$0.71 per share, during the July-to-September period, from NT$469 million, or NT$1.19 a share, in the previous quarter. That is a 15 percent drop from NT$324 million, or NT$0.88 per share recorded for the same period last year.

“The third quarter was slower than we expected because of weak demand from notebook computers,” Elan chairman Yeh I-hau (葉儀皓) said. “The fourth quarter will be another slow season. Improving demand for commercial notebooks will help cushion the decline.”

For this quarter, revenue would fall by between 3.2 percent and 6.7 percent to between NT$1.78 billion and NT$1.84 billion, from last quarter’s NT$1.9 billion, the company forecast.

“The forecast is better than the 10 percent quarterly decline forecast,” said Brandon Chen (陳木榮), a manager at the research department of Taiwan Cooperation Securities (合作金庫證券).

Yeh said the company would regain growth in March after customers reduces their stockpiles to normal levels.

Elan, which makes driver ICs for touch panels, counts China’s Lenovo Group (聯想) and Japan’s Sony Corp as among its major clients.

MARKET HOLD

The company’s driver ICs for notebook touch panels account for the biggest portion of its revenue. Elan holds about 40 percent of the worldwide market and expects to maintain that position next year.

Elan said shipments of driver ICs for notebook computers would fall about 17 percent to as low as 2 million units this quarter, from last quarter’s 2.4 million units, after a 26 percent sequential decline in the third quarter.

Gross margin would improve from 44 percent last quarter to between 44 percent and 46 percent on stabilizing prices and higher shipments of higher-margin products, the company said.

“Prices have been falling over the past quarters. We believe prices are stabilizing,” Yeh said.

OUTLOOK

Elan is upbeat about next year’s outlook.

Yeh said Elan would benefit from growing penetration of touchscreen notebook computers, saying that about 24 percent of overall notebooks and ultra-thin notebooks will be outfitted with touch screens, up from 10.8 percent this year, citing local market researcher WitsView’s forecast.

Another growth momentum would come from the smartphone segment, given the uptake of low-cost on-cell touch panels for smartphones next year, Yeh said.

Elan supplies driver ICs to several Taiwanese panel makers, including Innolux Corp (群創科技), AU Optronics Corp (友達光電) and Chunghwa Picture Tubes Ltd (中華映管) for the new on-cell touch panels.

It plans to expand the number of its e-reader customers from two — Sony Inc and Barnes & Noble — to three next year.

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