E Ink Holdings Inc (元太科技), which supplies e-paper displays for Amazon.com Inc’s Kindle e-reader series, yesterday said revenue would grow up to 10 percent this quarter from a year earlier on seasonal demand, while royalty income would further boost its profits.
The company relies on royalty income from licensing Hydis Technologies Co’s LCD manufacturing patents to flat-panel makers for profitability, as little profit is made from its core e-paper display business.
E Ink recorded a profit of NT$105 million (US$3.2 million) last quarter, or NT$0.09 per share, from losses of NT$1.13 billion, or NT$0.99 per share, in the second quarter, supported by a non-operating income of NT$710 million including royalty income.
“We expect this year’s royalty income to remain at a high level of NT$3 billion as last year’s,” E Ink financial executive Lloyd Chen (陳樂群) said in a teleconference.
During the quarter ending June 30, operating losses improved to NT$137 million from losses of NT$478 million in the previous quarter, while gross margin rose to 28.74 percent from 23.4 percent, E Ink said.
This quarter, revenue is expected to grow by between 5 percent and 10 percent from NT$4.07 billion a year earlier, Chen said, citing new product launches by its clients. Revenue this quarter is likely to expand to 28.74 percent, or NT$4.48 billion, from the previous quarter.
As the e-paper display business stagnates, the company expects revenue from e-paper displays to drop to about 70 percent of its total revenue this year, while revenue from electronics tags, traffic signs and wireless powered display for mobile phones is likely to make up the remaining 30 percent.
Expenses from its discontinued operations with Hydis are expected to shrink further this quarter from last quarter’s NT$395 million, the company said, adding that the company has included costs for redundancy packages for Hydis employees.
The expenses stood at NT$962 million in the first quarter after E Ink shut down Hydis’ factories in South Korea early this year. E Ink is seeking potential buyers for Hydis faculties and equipment, Chen said.
While last quarter's loss from Hydis operations was more than the company’s previous estimates, Yuanta Securities Investment Consulting Co (元大投顧) said other operating metrics that include gross margins, net cash and royalty incomes, showed decent improvement in the quarter.
“Losses from Hydis will continue to decrease in the third quarter and should be significantly reduced by the fourth quarter,” Yuanta analyst George Chang (張家麒) said yesterday.
“For now, we forecast earnings per share of NT$0.63 in the third quarter, followed by NT$0.78 in the fourth quarter,” Chang said.
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