Wed, Aug 10, 2016 - Page 11 News List

Phison shares continue free fall amid scandal

FALSIFIED STATEMENT ALLEGATIONS:The company’s chairman, who has been released on bail, said its profits were ‘real,’ but said that it had skirted accounting rules

Staff writer, with CNA

Shares of Phison Electronics Corp (群聯), a Taiwan-based NAND flash controller supplier, yesterday continued to plunge following allegations that the memorychip company falsified its financial statements, dealers said.

Although the chipmaker on Monday announced it would launch a share buyback program, which began yesterday, its shares still dropped by the maximum daily limit of 10 percent for the second consecutive session, they said.

Phison shares closed at NT$219, with 1,220 shares changing hands on the Taipei Exchange, dragging down the index for small and medium-sized enterprises.

“As prosecutors investigate Phison’s alleged falsification of its financial statements, investors simply dumped the stock for fear that more negative news will emerge,” Hua Nan Securities (華南永昌證券) analyst Kevin Su (蘇俊宏) said.

Despite the share buyback program, investor confidence has been badly hurt, pushing the stock down by another 10 percent, Su said.

According to Su, orders to sell about 19 million Phison shares have accumulated since news of the allegations first surfaced.

The stock could face sustained downward pressure, Su said.

On Monday, Phison announced it would buy back up to 7.5 million shares at between NT$189 and NT$270 starting yesterday and running through Oct. 8 after the financial scandal hit the stock.

Over the weekend, Hsinchu prosecutors raided the Hsinchu-based IC suppler and its subsidiaries on allegations of violations of the Securities and Exchange Act (證券交易法).

Phison chairman Pua Khein-seng (潘健成) was questioned by prosecutors, but was released on bail of NT$20 million (US$635,829) and barred from leaving Taiwan.

Pua denied the accusations and said that the company’s profits were “real.”

He said that the company “crossed the line” by skirting accounting rules related to transactions among its subsidiaries, but he did not say which lines were crossed.

Pua also rejected accusations that he was involved in the embezzling of funds through transactions between the company and its subsidiaries, insisting that Phison did nothing to hurt shareholders’ rights.

To show that the company remained profitable, Phison released a financial statement that showed the company posted NT$1.22 billion in pre-tax profit in the second quarter, up by 14.88 percent from a quarter earlier.

Based on its paid-in capital of NT$1.97 billion, Phison had earnings per share before tax of NT$6.16 in the second quarter and NT$11.52 in the first half.

Phison is scheduled to release its second-quarter results ahead before Monday next week, after an audit by accountants.

Pua said Phison has about NT$10 billion in cash and cash equivalents, indicating that the company is financially sound.

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