MediaTek Inc (聯發科), the nation’s largest handset chip designer, said yesterday its fourth-quarter net income dropped 45.1 percent quarter-on-quarter and 56.2 percent year-on-year, citing seasonality factors, falling prices and the rising New Taiwan dollar.
For the current quarter, the company said it expected consolidated revenues to fall by between 7 percent and 14 percent from the previous quarter, as consumer electronics and PC demand hit the seasonally slow period, while the Lunar New Year holiday cuts the number of working days this month.
MediaTek’s net income totaled NT$3.83 billion (US$130.7 million) in the October to December quarter, with earnings per share (EPS) of NT$3.52, the company said in a statement yesterday. The quarterly figure was the lowest since the fourth quarter of 2008, when it posted NT$2.88 billion profit amid global financial crisis.
Last quarter’s net income was also compared with a NT$6.97 billion profit (a NT$6.40 EPS) made in the third quarter and a NT$8.75 billion profit (an NT$8.03 EPS) made a year earlier, according to the statement.
Quarterly revenue dropped 19.5 percent quarter-on-quarter and 22.1 percent year-on-year to NT$22.68 billion, while gross margin declined 3 percentage points to 49.2 percent for the quarter from the previous quarter, or 9.5 percentage points less than the same period last year.
“The decline in revenue was mainly due to the off-season effect of optical storage and consumer electronics product, price erosion of low to medium-end handset chipset, as well as NT dollar appreciation against the US dollar,” the statement said. “Gross margin contraction was mainly caused by a lower average selling price and NT dollar appreciation.”
MediaTek president Hsieh -Ching-jiang (謝清江) told investors in a teleconference that he was upbeat about handset chip shipments this year, adding that sales contribution from the 3.75-generation chips for smartphones and TD-SCDMA chips are likely to start emerging in the second half of the year.
“Handset chip shipments are expected to increase at least 10 percent from 500 million chips last year,” Hsieh said.
As for smartphone chips, the company is targeting on a shipment of 10 million chips in the 2.75G and 3.75G chips, he added.
Despite his optimism for the year, Hsieh said first-quarter sales would likely drop to a range between NT$19.5 billion and NT$21.1 billion, from NT$22.68 billion last quarter, because of seasonality and shortened workday factors.
Gross margin is also expected to continue falling to a range between 45 percent and 47 percent, from 49.2 percent last quarter, because of a change in product mix and NT dollar appreciation, he said.
However, he stressed that the company would still prioritize on market share rather than gross margin this year and expected the second quarter to be the trough quarter for gross margin.
For the whole of last year, -MediaTek earned NT$30.96 billion, or NT$28.44 per share, on revenue of NT$113.52 billion and a profit margin of 53.7 percent. In 2009, the company earned NT$36.71 billion on revenue of NT$115.27 billion and a gross margin of 58.7 percent.
Shares of MediaTek have fallen 5.15 percent so far this year and closed at NT$396 on Friday. The local stock market is closed this week and will resume trading on Tuesday next week after the Lunar New Year holidays.
Meanwhile, Citigroup in a client note yesterday cut its target price for MediaTek by 21.8 percent to NT$190, from a previous NT$243, saying that the company’s fourth-quarter earnings missed its forecast coupled with the poor sales guidance for the current quarter.
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