TPK Holding Co (宸鴻), a major supplier of touchpanels for Apple Inc’s iPhone 6S and Watch, yesterday reported a quarterly loss of NT$19.39 billion (US$595 million) due to massive asset impairments.
The company said it is undertaking a drastic restructuring as lackluster demand for touchscreen notebook computers has affected its factory utilization rate, leaving some of its equipment idle.
TPK posted NT$18.97 billion in impaired assets last month, mainly from unprofitable and idled equipment.
Net loss last quarter was about six-fold its share capital of NT$3.2 billion.
“We are refocusing on core technologies and [profitable] products. We are refocusing on our major customers. To do so, we have to make some adjustments,” TPK chairman Michael Chiang (江朝瑞) told investors. “This is something we have to do to return the company to health.”
Without the burden of money-losing equipment, TPK expects to add NT$2.09 in earnings per share to its bottom line this quarter. Earnings for next year could get an extra additon of NT$7.98 per share as the company plans to cut operating costs by NT$800 million this quarter and by NT$3.28 billion next year, the company said.
TPK said the asset impairment would not affect the company’s cash position, which stood at NT$27.22 billion as of the end of last quarter.
The company yesterday reported a 9.1 percent increase in revenue to NT$14.05 billion last month, from NT$12.88 billion in September.
To assure investors, TPK’s board yesterday approved a share buyback program. TPK is to repurchase 20 million shares, or 5.7 percent of its total outstanding shares, at NT$64 to NT$135 a share over a two-month period starting today.
Excluding the one-time asset write-down, TPK swung into a net profit of NT$164 million last quarter, from losses of NT$618 million in the second quarter.
TPK counts Apple Inc and Microsoft Corp as two of its major clients, with Apple contributing 56 percent of the company’s total revenue last quarter, up from 36 percent a quarter ago.
Its gross margin improved to 8.8 percent last quarter, from 2.1 percent in the second quarter.
The quarterly profit fell short of HSBC Securities Corp’s estimate of NT$679 million and CIMB Securities Ltd’s estimate of NT$700 million.
For this quarter, TPK said that it aims to increase revenue by 5 percent from last quarter’s NT$34.24 billion, supported by robust demand for notebook computers equipped with Microsoft’s Windows 10 operating system.
CIMB yesterday cut its revenue forecast for TPK this quarter to a 5-percent increase quarter-on-quarter from an earlier estimate of 26 percent growth, citing the seasonal decline of Apple orders and the consolidation in its client base.
"To factor in lower depreciation expense thanks to asset write-offs, we forecast fourth-quarter EPS of NT$4.5 on the back of 4.9 percent operating margins," CIMB analyst Eric Lin (林育名) said in a note.
But there is a potential downside risk if TPK further writes off its financial exposure on its touchpanel subsidiary Cando Co (達鴻), which is equivalent to around NT$4.6 per share, Lin said.
TPK said it is considering whether to sell its shareholding in loss-making Cando.
TPK holds about 20 percent shares in Cando, which has been struggling to make a profit and is facing cash crunch due to falling touchpanel demand.
This story has been updated since it was first published.
Gogoro Inc (睿能創意) yesterday launched its first electric bicycle, the Gogoro Eeyo 1, in Taiwan, after unveiling the bike in New York in late May and in France on Tuesday. The company said it would also introduce the series in other European countries such as Germany and the Netherlands. The “Eeyo project” is the fourth of Gogoro’s eight projects that concentrate on smart transportation, which includes Gogoro’s electric scooter, battery swap system and electric scooter sharing service, company founder and chief executive officer Horace Luke (陸學森) told a media briefing in Taipei. “There are various types of city commuters. We will not
EXPERIMENTAL DRUG: While news about a COVID-19 vaccine is more eye-catching, developing a treatment would be more viable, the Senhwa boss said Senhwa Biosciences Inc (生華科) aims to raise NT$1.5 billion (US$50.57 million) by issuing 15 million new common shares in the third quarter of this year to fund the research of new drugs, including the experimental drug Silmitasertib for the treatment of COVID-19, the company said on Monday. That would be the firm’s largest fundraising effort after it raised more than NT$1.4 billion from an initial public offering on the Taipei Exchange (TPEX) in April 2017, chief financial officer Sarah Chang (張小萍) told the Taipei Times by telephone. The price of the new shares would depend on the firm’s average share price
NOT A PANACEA: Offering 5G services would not solve the problem of declining telecom incomes, chairman Sheih Chi-mau said, expecting a flat 5G telecom revenue Chunghwa Telecom Co (中華電信) yesterday became the nation’s first telecom to debut its 5G services, offering tiered tariffs that include a threshold of NT$599 and flat rates, as it aims to switch half of its subscribers to the 5G network within three years. Subscribers would have unlimited data transmission for monthly fees starting at NT$1,399 — the same flat rate as when the company launched its 4G service in 2014 — and they can subscribe to the highest-rate plan for NT$2,699 per month for faster data transmission speeds and larger bandwidth, the company said. Data transmission speeds would be within the range
STAYING AHEAD: TSMC expects its sales this year to grow 14 to 19 percent and could spend up to US$3.52 billion on research and development, leaving its rivals far behind Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) reported that the US last year approved 99 percent of its patent applications, which placed the tech giant among the top patent holders in the US. In its Corporate Social Responsibility Report, TSMC said it last year secured about 3,600 patents worldwide, including more than 2,300 in the US. As of the end of last year, TSMC owned more than 39,000 patents, the report said. The company last year filed almost 6,500 patent applications worldwide and ranked among the top 10 patent applicants in the US. In Taiwan, it was the largest patent applicant for the fourth