Touch-panel controller chip maker Elan Microelectronics Corp (義隆電子) is expected to report flattish revenue this quarter after last month’s sales changed little from the previous month.
However, the company’s growth momentum should resume next quarter, when its new products running Microsoft Corp’s Windows 8.1 operating system and Intel Corp’s Haswell chipset become available, analysts said.
Last month, Elan’s consolidated revenue was NT$625.59 million (US$20.9 million), up 0.81 percent from NT$620.56 million in July, but down 0.23 percent from NT$627.02 billion in August last year, the company said yesterday in a filing to the Taiwan Stock Exchange.
That was in line with the NT$620 million forecast by SinoPac Securities Investment Service Co (永豐投顧) analyst Martina Huang (黃瑞君).
For the current quarter, Huang revised downward her revenue forecast to NT$1.94 billion from a previous estimate of NT$2.05 billion due to low industry visibility.
She also cut down her earnings per share (EPS) forecast to NT$0.81 from NT$0.94 for the quarter, according to a note released on Aug. 30.
From January through last month, cumulative revenue totaled NT$5.27 billion, up 11.29 percent annually, Elan said.
The company has seen its shares pull back 31 percent from a high of NT$80 on May 6, as investors took note of the company’s weakened growth momentum this quarter amid sluggish demand for touchscreen notebook computers.
On Aug. 6, the company told investors that it expected revenue would decline by between 4 percent and 6 percent this quarter from NT$2.16 billion last quarter, while gross margin could fall to between 46 percent and 47 percent from 47.43 percent, as shipments from notebook touch controller chips and tablet controller chips are estimated to decline sequentially.
“Demand for touch notebooks has been disappointing into the second half this year,” Yuanta Securites Corp (元大證券) analyst George Chang (張家麒) said in his note released on Tuesday.
“To make things worse, investors have compared Elan’s momentum to Egalax Empia Technology Inc (禾瑞亞科技) in the third quarter and wondered whether Elan is losing market share,” he said.
Smaller rival Egalax Empia reported in a stock exchange filing yesterday that its revenue rose 26.24 percent month-on-month and 187.61 percent year-on-year to a record level of NT$205.57 million last month.
Egalax Empia is likely to grow this quarter’s revenue by up to 40 percent sequentially thanks to low-cost embedded touch panel solution orders from AU Optronics Corp (AUO, 友達光電), analysts said.
However, they said Elan’s stalled sales growth was mainly due to a slowdown in demand, driven by the cautious attitude of touchscreen notebook buyers, rather than a decline in its competitiveness.
“Even if the low-cost trend materializes, Elan will also soon have matching solutions for AUO and Innolux (群創光電) to capture business opportunities,” he said.
“Although near-term momentum is not in its favor, we maintain our long-term positive view on the company,” he said.
Capital Securities Corp (群益證券) said touch-screen notebooks’ increasing penetration rate could lift Elan out of the current conundrum.
“In light of accelerating inventory ramp-up among global notebook brand clients, we expect the company’s operation to bottom out in the third quarter,” Capital Securities said in a report on Wednesday.
Elan’s revenue generated from high-margin notebook touch controller chips is estimated to grow by 26.29 percent sequentially next quarter, the report said.
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