More technology firms have conducted capital reductions due to damage they have sustained since the 2008 financial crisis, market analysts said yesterday.
Since March, a new high of 44 companies listed on the Taiwan Stock Exchange and over-the-counter market have undergone capital reductions, with an historic combined high of NT$293.14 billion (US$9.25 billion) in capital slashed by the firms in question, analysts’ figures show.
Twenty-five of these companies are technology firms that resorted to decreasing the value of their equity mostly to write off operating losses.
According to a local newspaper report, capital reductions carried out by just three DRAM makers totaled NT$181.49 billion (US$5.8 billion), accounting for around 62 percent of the total figure.
Over the past few decades, the progress of technology evolution has driven technology companies to become sensitively and deeply linked to market volatility, as their huge spending on expansion or efforts to keep up with the latest trends often make them much more vulnerable to subtle changes in business conditions than traditional businesses, analysts said.
The present wave of capital reductions — including capital reductions by Taiwan’s two largest carriers, China Airlines Ltd (中華航空) and EVA Airways Corp (長榮航空), in the second half of last year — actually started in the middle of that year, when the country was affected by outbreaks of A(HIN1), or swine flu, that led to a marked drop in the number of people traveling overseas, according to the analysts.
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