Yageo Corp (
"We're seeing demand returning to normal. Though growth is slower than we expected three months ago, we still expect a high single-digit growth in the third quarter," Yageo president Remko Rosman told an investors conference yesterday.
Growth will be driven by demand for computers and consumer electronics including mobile phones and set-top boxes, which help switch analog signals into digital, Rosman said.
Looking ahead, Yageo expects growth to accelerate, boosted by new orders from mobile-phone giants including Nokia Oyj and electronics manufacturing services (EMS) providers such as Flextronics International Ltd.
Smelling the Air
"We have identified the positive trends. I smell more customers every day. And I may say, at this time, I smell more nice aromas and sweet aromas than bitter aromas," vice president Lambert Hikes said.
Up to 40 percent of Nokia's 15 million handsets made this year will use Yageo's resister chips, Hikes said.
Swedish-Japanese cellphone maker Sony Ericsson Mobile Com-munications Ltd is on Hikes' long list of new customers, in addition to Motorola Inc of the US and Siemens AG of Germany.
The upbeat comments came as Yageo posted lower second-quarter profits, with the Taipei-based company's earnings sliding 62 percent to NT$157 million (US$4.6 million), or NT$0.07 a share, versus NT$415 million, or NT$0.18 a share, three months earlier.
Compared with the same period last year, Yageo has made significant progress in its bottom line by reversing a loss of NT$375 million, or NT$0.17 per share.
The second-quarter result, how-ever, fell short of the projection of NT$0.12 earnings per share made by JP Morgan.
In his latest research note released on Monday, Nicolas Baratte, a JP Morgan analyst, recommended that his customers remain "neutral" on the stock, expecting price erosion to come back in the current quarter after two steady quarters.
Yageo expects prices to slide 4 percent during the three-month period to September, according to Rosman.
Waiting Period
"The deeper price decline in the typicallyhigh season bodes ill for end demand. We're still waiting for demand to pick up," said Jason Lin (
During the last quarter, Yageo was able to keep prices of its major products, multilayer ceramic capacitors (MLCC) and resister chips steady, dropping 1 percent from the first quarter.
Sales from MLCC area accounted for a hefty 47 percent of Yageo's total sales of NT$4.52 billion in the April to June quarter.
The resister chips business contributed about 30 percent of sales.
For the current quarter, Yageo expected shipments to rise by between 6 percent and 10 percent from the second quarter.
During last quarter, Yageo shipped 10 billion units of MLCC and 20 billion resister chips.
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