E Ink Holdings Inc (元太科技), which supplies e-paper displays for Amazon.com Inc’s Kindle series, swung into a loss in the first quarter as royalty income shrank drastically, the company reported yesterday.
The net loss was NT$272 million (US$8.34 million) during the quarter ending March 31, compared with a net profit of NT$766 million in the final quarter last year, as non-operating income nosedived to NT$328 million from NT$1.32 billion over the period, the company said.
However, first-quarter losses narrowed from NT$1.23 billion in losses a year ago, as losses stemming from its unprofitable South Korean subsidiary Hydis Technologies Co improved noticeably to NT$26 million from NT$962 million following plant closures in March last year.
Operating losses swelled to NT$495 million last quarter, compared with NT$188 million a quarter ago and NT$478 million a year earlier.
E Ink has been making operating losses over the past two years, except reporting an operating profit of NT$354 million in the third quarter last year.
Gross margin was 29 percent in the first quarter, down 7 percentage points from the previous quarter due to smaller scale of operation, but much higher than 23 percent a year earlier.
E Ink financial executive Lloyd Chen (陳樂群) told a teleconference yesterday that revenue for this quarter would grow to a level similar to the NT$3.48 billion made in the second quarter last year.
That will represent a growth of 39 percent from first-quarter revenue of NT$2.5 billion.
E-paper displays for e-readers accounts for 70 percent of E Ink’s total revenue, with about 30 percent from e-papers for e-tags used in luggages and retailers’ shelves and LCD panels, the company said.
Commenting on this year’s royalty income outlook, Chen said that the number will fall by between 5 percent and 10 percent from last year’s NT$3 billion, affected by the industry’s rising adoption of organic LED (OLED) display technology.
However, “the impact will not be significant over the next two to three years because the manufacturing costs on OLED technology are still higher,” Chen said.
E Ink charges royalty fees by licensing Hydis’ high-resolution fringe-field-switching (FFS) LCD technology, which was first adopted by Apple Inc in its iPhone 4 and iPad models.
Apple’s recent plans to adopt OLED technology for new iPhones have triggered concerns about demand for FFS technology and therefore E Ink’s royalty income.
E Ink shares rose 1.64 percent to NT$15.5 yesterday.
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