HannStar Display posts ninth quarterly net loss

TOUGH SEGMENT: The company's 19-inch LCD panel business accounted for 90 percent of its total sales revenue last quarter, worth NT$15.72 billion


Sat, Oct 28, 2006 - Page 12

HannStar Display Corp (瀚宇彩晶), one of the nation's leading makers of flat panels, yesterday posted its ninth straight quarterly net loss due to the drastic decline in panel prices. The company said a short-lived price rebound recently gave no guarantee of a quick turnaround.

The company's net loss widened to NT$3.04 billion (US$91 million), or NT$0.50 per share, during the third quarter, compared with a loss of NT$944 million, or NT$0.16 a share, a year ago. In the second quarter, the firm reported a loss of NT$2.7 billion, or NT$0.45 a share.

HannStar's net loss in the three months to Sept. 30 compares to bigger rivals Chi Mei Optoelectronics Co's (奇美電子) net loss of NT$1.41 billion and AU Optronics Corp's (友達光電) net income of NT$631 million during the same period.

"The dramatic decline in panel prices in the third quarter has hurt our gross margin," HannStar president Joe Chou (周定輝) said in a conference call with investors and analysts yesterday.

The company's gross margin was down to minus 11 percent from 2 percent a year earlier. The company reported a negative gross margin of 7 percent in the second quarter.

Despite the recent rebound in liquid-crystal-display (LCD) panels for computers created by supply constraints, Chou was conservative about the possibility of a return to profitability in the current quarter.

The company's 19-inch LCD panel business accounted for 90 percent of HannStar's total revenue of NT$15.72 billion last quarter.

"We hope to return to the black as soon as possible, but we are likely to see panel prices weaken in November and December after hitting a high in October," Chou said.

Overall, however, the average selling price (ASP) for LCD panels would improve slightly in the current quarter from US$129 per unit in the July-September period, Chou said, without giving details. ASP has plunged 25 percent from US$174 a year ago.

Shipments of computer and television panels would expand by single-digit percentages this quarter from 3.87 million units last quarter, Chou said, while demand for small-sized panels for portable displays would increase sharply.

With HannStar still struggling to make a profit, Chou said the company has no substantial plans to build a next-generation plant. Merger was also not an option for a quick fix now, he added.

"HannStar should be able to break even this quarter under its own steam," said Eric Lin (林宜正), a flat-panel industry analyst with Yuanta Core Pacific Securities (元大京華證券).

HannStar could even start to eke out a profit after including non-operational gains of around NT$3.6 billion from selling a less advanced plant to Wintek Corp (勝華), the world's No. 2 maker of handset panels.

Last month, Hannstar signed an agreement with Wintek to sell it a third-generation (3G) plant for NT$6.1 billion in cash and stock.