Chartered likely to keep its sales estimate for 3Q

Chartered Semiconductor Manu-facturing Ltd (特許半導體) will probably stick to its July forecast for third quarter sales and losses, the first time this year the Singapore-based company hasn't cut its estimates, analysts said.

The third-largest maker of custom-made chips warned of weaker sales and wider losses in the middle of the first and second quarter as demand from customers such as Ericsson AB and Conexant Systems Inc waned amid a slowing economy. Chartered will issue a mid-quarter review after the US market closes.

Analysts say the company won't sway much from its expected loss of US$0.94 to US$0.96 for each US depositary receipt, and a 15 percent quarter-on-quarter drop in sales to US$85.5 million. Investors and analysts will be watching whether Chartered provides a glimpse into fourth quarter prospects.

"Most people would have written off the third quarter," said Dharmo Soejanto, an analyst at Kim Eng Securities Pte in Singapore. "Investors are more interested in the fourth quarter and whether things have hit bottom."

Analysts are anxious for Chartered's business to pick up again because the company is lagging behind rivals Taiwan Semiconductor Manufacturing Co (台灣積體電路公司) and United Microelectronics Corp (聯電) in Taiwan.

In July, Chartered said it will slash spending on equipment and other expenses to US$700 million this year from an earlier target of US$1.2 billion.

The company also delayed the opening of a US$3.5 billion plant in northern Singapore to 2003 from next year, after postponing the opening this year. That's because Chartered only uses about a quarter of its equipment at its five Singapore plants in the third quarter, leaving the rest idling.

Chartered will probably post a loss of US$134.8 million, or US$0.97.5 for each ADR, in the third quarter, little changed from the company's estimates, according to the average estimate of four analysts surveyed by Bloomberg News. An ADR is made up of 10 Chartered shares. Sales are expected to fall to US$83.2 million.

``It's pretty much water under the bridge,'' said Gregory Yap, head of research at OCBC Investment Research Pte in Singapore.

"Even if they revise the numbers down, the price wouldn't get hit as investors have priced in the bad news."

Chartered shares have fallen 69 percent in the past year, compared with a 64 percent drop for the Bloomberg Asia Pacific Semiconductor Index.