Chunghwa Picture Tubes Ltd (中華映管), the nation's third-largest maker of liquid-crystal-display (LCD) panels, yesterday reported that losses in the fourth quarter narrowed because of an improving cost structure and better screen prices. Analysts warned, however, that the recovery looked shaky and the company's losses may widen in the current quarter because of an ongoing supply glut.
The firm's losses shrank to NT$2.03 billion (US$61.5 million) in the three months ended December, compared with losses of NT$4.63 billion in the third quarter, making it the seventh straight quarterly loss.
A year ago, the company reported a fourth-quarter net profit of NT$739 million.
"The results fell short of my expectations," said Roger Yu (游智超), a flat-panel industry analyst with Polaris Securities Co (寶來證券). Yu forecast that losses would shrink to NT$1.6 billion.
Chunghwa Picture attributed the smaller losses to the 21-percent quarterly increase in panel prices and increasing output from a more cost-efficient plant.
However, panel prices could reverse in the current quarter with screen prices for monitors and televisions expected to decline by 7 to 13 percent and 5 to 10 percent, respectively, quarter on quarter, because of a supply glut and the seasonal slowdown, the company said.
To minimize the negative impact, the company plans to shift "more capacity from large-screen TVs, which are unprofitable, to higher-margin products such as monitor panels," Chunghwa Picture financial executive James Wu (巫俊毅) said.
TV panels accounted for 16 percent of its total shipments of 6.3 million units in the fourth quarter, up 3 percentage points from the third quarter, the flat-panel maker said.
The company expects shipments to remain largely unchanged this quarter, Wu said, citing relatively healthy demand.
Yu expects Chunghwa Picture to post deeper losses in the current quarter as oversupply continues to plague the industry in the first half of the year.
On a full-year basis, Chunghwa Picture saw its losses expand to NT$13.9 billion, or a loss per share of NT$1.7, last year. These compare with losses of NT$7.35 billion, or a loss per share of NT$0.9, in 2005. Revenues were up 23 percent annually to NT$126.71 billion last year.
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