E Ink shows Q1 loss after Amazon adjusts inventory

By Amy Su  /  Staff reporter

Fri, Apr 27, 2012 - Page 12

E Ink Holdings Inc (元太科技), the world’s biggest e-paper display supplier, which counts Amazon as its No. 1 client, yesterday reported its first quarterly loss since the fourth quarter of 2009 amid its major customer’s inventory adjustment.

Consolidated net loss totaled NT$838 million (US$28.5 million), or a loss per share of NT$0.73, in the first quarter, compared with a net income of NT$1.26 billion, or NT$1.19 per share, in the fourth quarter of last year, the company said.

On an annual basis, the figure was also substantially worse than the net profit of NT$1.67 billion, or NT$1.56 per share, recorded in the first quarter of last year, data showed.

E Ink chairman Scott Liu (劉思誠) attributed the first-quarter loss to lower sales and a deteriorating product mix, both led by its major client’s inventory digestion.

“Our major customer was too optimistic about its sales in the fourth quarter of last year and ordered too much from us,” Liu told an investors’ conference in Taipei. “That made the customer order almost nothing from us in the first quarter.”

The fall-off in orders pushed down first-quarter revenue and also dragged down shipments of e-paper displays, the company’s flagship product with higher gross margins.

That also caused E Ink’s capital utilization to deteriorate, further lowering the company’s gross margin to 0.8 percent in the first quarter, from 28.5 percent in the fourth quarter last year.

However, Liu said he expects the first-quarter loss to be the bottom for the company’s performance this year and remains optimistic over the medium term.

“We believe our major customer will launch a new product in the third quarter as usual, which may drive up replacement purchases and attract new buyers,” Liu said.

First-quarter revenue totaled NT$3.84 billion, down 63 percent from the previous quarter and 61 percent from the previous year, data showed.

E Ink shares dropped 3.27 percent to close at NT$34.05 yesterday, underperforming the TAIEX’s 0.55 percent decline, Taiwan Stock Exchange data showed.