Pegatron Corp (和碩), Apple Inc’s second-largest iPhone assembler, yesterday reported a nearly 40 percent annual drop in net income for last quarter, dragged down by weak iPhone sales and declining contributions from its components subsidiaries.
Net profit last quarter was NT$3.72 billion (US$127.4 million), compared with NT$5.86 billion a year ago, marking the company’s lowest record over the corresponding period in the past five years, company data showed.
“The ramp-up of a major communication product started later than planned and the peak season for the product ended earlier than expected. Pegatron’s expanded production only ran on full capacity for one or two months,” chief financial officer Charles Lin (林秋炭) told a teleconference.
A low utilization rate, surging costs on idle personnel and capacity expansion expenses affected Pegatron’s margin performance last quarter, Lin said.
Gross margin fell 1.55 percentage points annually to 3.2 percent during the October-to-December quarter, the lowest since the fourth quarter of 2012. Operating margin shrank 1.3 percentage points to 1.2 percent, the weakest since the third quarter in 2013.
The sluggish earnings performance of component subsidiaries, such as Casetek Holding Ltd (鎧勝) and Kinsus Interconnect Technology Corp (景碩), also weighed on Pegatron’s margins, Lin said.
“The impact from the components subsidiaries accounted for between 30 and 40 percent of Pegatron’s margin decline last quarter,” Lin said.
Pegatron this year will focus on responding quickly to rapid changes in the market and improving its subsidiaries’ profitability, he said.
Pegatron chief executive officer S.J. Liao (廖賜政) said that management remains optimistic about the firm’s communication business this year, as its main smartphone client is estimated to add new functions for its new product.
“We think the new functions and applications will stimulate demand for the device,” Liao said.
Pegatron’s consumer electronics segment, which contributed 13 percent to its revenue of NT$377.56 billion last quarter, is estimated to see better performance this year, supported by growing orders for game-related products and “smart” home devices, Liao said.
The company is prepared to spend between US$350 million and US$400 million in capital expenditure this year, with more than US$200 million of that focusing on production expansion for communication and consumer electronics products, Lin said.
The company’s net income plunged 24.05 percent annually to NT$14.68 billion last year, or NT$5.66 per share.
Pegatron’s board also approved a proposal to distribute a cash dividend of NT$4 per share.
That translates into a payout ratio of 70.67 percent, higher than the previous year’s 66.66 percent, and a yield of 5.26 percent based on its closing price of NT$76 yesterday.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure