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Hynix generatesfirst quarter losses of US$354 million

Hynix Semiconductor Inc, the world's second-largest computer-memory-chipmaker, said it lost 460 billion won (US$354 million) between January and March as the price of its main product collapsed and it booked charges to clean up its finances.

Hynix said in a statement that operating profit slumped 70 percent from a year earlier and 78 percent from the preceding quarter to 70 billion won. The company booked one-time losses of about 535 billion won in the first quarter, leading to a net loss of 460 billion won, a company financial official said separately.

Hynix faces a double whammy: the price of dynamic random access chips, its main product, are close to or below the cost of production just as it struggles to repay 5.6 trillion won this year, the legacy of financing capital-intensive projects with short-term, high-interest debt.

"The overall semiconductor market and world economy remain relatively weak," Park Chong Sup, the company's chief executive, told analysts. "For the second quarter, we may continue to experience weak DRAM prices even though there were temporary increases in shipments at the end of March."

DRAM spot prices tumbled by three quarters since last September, when Hynix registered its last quarterly profit. Prices fell since then as personal computer makers slashed component orders because they can't sell their products.

The company, formerly known as Hyundai Electronics Industries Co, attributed its one-time loss to 240 billion won of interest payments, 194 billion won from foreign exchange translation losses and the balance from inventory reevaluation and losses related to affiliates. It didn't explain why it classified interest payments as one-time losses.

Sales fell 13 percent from the same period last year and 14 percent from the previous quarter to 1.74 trillion, the statement said. Semiconductor sales totaled 1.25 trillion won, down 19 percent from the previous quarter and 21 percent from the same period a year earlier.

Sales of liquid crystal displays rose 6 percent from the same period last year -- though they fell 31 percent from the previous quarter -- to 111 billion won. Telecom-related sales rose 19 percent from the same period a year ago to 400 billion won on improved exports, it said.

For the year, Hynix is expected to lose 508 billion won (US$382 million), according to a poll of 18 analysts by Ibes International Inc, indicating the company was forecast to lose 127 billion won in the first quarter. Analysts don't make forecasts on Korean companies by quarter.

Hynix is trying to abide by terms imposed by creditor banks that demanded the company reduce debt in return for agreeing to refinance 80 percent of its corporate bonds maturing this year.

In the first three months of the year the company reduced its interest-baring debt by 467 billion won to 7.3 trillion won using cash from operations and the sale of assets, Park said.

Hynix is negotiating to sell shares, bonds or a combination of the two overseas to raise more funds, according to Simon Parker, an investment banker at Salomon Smith Barney, which is advising the chipmaker on its attempts to raise cash.
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