Thu, Nov 05, 2015 - Page 13 News List

Wistron net income cut by liquidation losses at subsidiary

By Lauly Li  /  Staff reporter

Wistron Corp’s (緯創) net profit plunged 54.65 percent annually to NT$657 million (US$20.16 million) last quarter, mainly due to a one-time write-off from a subsidiary.

“We booked a one-time liquidation loss of NT$380.9 million from Wistron Services BV due to the euro’s depreciation against the US dollar,” the company’s investor relations official said by telephone.

The contract computer manufacturer said it transferred Wistron Services BV — the firm’s customer service center in Europe — from the Netherlands to the Czech Republic in a bid to reduce costs.

However, Wistron had to book a liquidation loss because of euro’s heavy depreciation this year, the official said.

Winstron also recognized an impairment loss of NT$96.8 million for long-term investments last quarter, she said.

In addition, the company had a relatively high income tax rate of 49.56 percent last quarter, mainly due to an accrual related to potential tax liabilities of NT$306.7 million, she said, adding that the company was still negotiating with tax authorities about the amount.

Wistron’s pre-tax profit was NT$1.31 billion last quarter, while net profit increased to NT$657 million from the previous quarter’s NT$77 million.

Earnings per share were NT$0.57 last quarter, compared with NT$0.85 a year ago and NT$0.01 in the second quarter.

Revenue last quarter declined 2.14 percent from the previous year to NT$152.41 billion, largely due to overall weak PC and smartphone demand, the official said.

Wistron expects shipments of notebooks — its core business, which accounts for about 42 percent of total shipments — to drop sequentially this quarter.

“Given better-than-expected notebook shipments last quarter, we expect shipment would fall sequentially this quarter because of the higher base,” the official said.

Shipments of LCD modules, which account for about 12 percent of the company’s total shipments, are expected to grow significantly from the prior quarter, she said, citing strong demand.

The LCD modules are mainly used for small-to-medium-sized devices, such as smartphone or tablets, the official said.

The company did not provide guidance for its smart device segment, which accounts for about 11 percent of total shipments.

“Our main client has requested us not to disclose shipment guidance... The client is very sensitive to information disclosure,” the official said.

Wistron is one of Apple Inc’s iPhone 5C suppliers, but it has not been confirmed as one of Apple’s iPhone 6S suppliers.

Thompson Wu (武光明), an analyst at Credit Suisse Group AG's Taiwan equity research division, said Wistron is now focusing on its growth businesses of smart devices, server and storage products as well as LCD modules in the face of a slowdown in its PC and recycling segments.

However, this may not only depress the firm's operating margins but may also involve the cleaning-up of its production assets in the near term, Wu said in a client note yesterday.

CIMB Securities Ltd yesterday said in a report that Wistron's smartphones and LCD modules will lead sales growth among the product lines this quarter, while notebook shipments may decline by 5 percent quarter-on-quarter and sales to fall 2 percent sequentially.

Wistron’s stock price increased 1.51 percent to NT$16.85 in Taipei trading yesterday, underperforming the TAIEX, which gained 1.65 percent.

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