Compal Electronics Inc (仁寶), the world’s No. 2 contract laptop computer maker, yesterday revised its first-quarter financial results and posted losses of up to NT$2.26 billion (US$749.76 million) due to an unexpected one-time write-off.
The company on Thursday last week reported a net profit of NT$2.47 billion during the January-to-March quarter, or earnings per share of NT$0.57.
However, the Chinese Arbitration Association in Taipei yesterday ruled that home appliance maker Tatung Co (大同) should pay Compal NT$2.11 billion for the private equity of LCD panel maker Chunghwa Picture Tubes Ltd (中華映管), far below Compal’s claim of NT$7.8 billion. Compal must therefore book a one-time loss of NT$4.73 billion for last quarter in accordance with accounting rules, which caused the company to post losses of NT$2.26 billion, or losses per share of NT$0.53, for the first three months of the year.
“We will seek legal solutions to our losses as a result of the ruling,” Compal said in a filing to the Taiwan Stock Exchange, without indicating whether the company plans to appeal the association’s decision.
In 2009, Compal purchased a 19.7 percent stake in Chunghwa Picture Tubes for NT$7 billion and became the company’s second-largest shareholder after Tatung.
The deal aimed to help Compal solve panel shortage issues, but because Chunghwa Picture Tubes failed to turn a profit after five straight years of losses, Compal in March last year demanded Tatung buy out Chunghwa Picture Tubes.
The two sides did not reach an agreement, prompting Compal to call for arbitration against Tatung to settle the dispute.
Nonetheless, the change to Compal’s first-quarter financial performance is not expected to have a material impact on the company’s fundamentals, Yuanta Securities Corp (元大證券) analyst Vincent Chen (陳豐丰) said.
“We believe that this one-time loss will not impact Compal’s fundamentals, or its future cash flow,” Chen said in a client note yesterday. “We estimate Compal has about NT$47 billion in cash on hand and as such it should not face any liquidity issues.”
Yuanta maintained its “buy” rating for Compal’s stock with a target price of NT$26.5, as the company continues improving its margin and diversifying its product mix.
Compal is also expected in the long term to benefit from growing replacement demand for notebooks and robust demand for mobile devices, Chen said.
Compal’s shares closed down 5.35 percent at NT$22.1 in Taipei trading yesterday after the company announced the revision.
The company is planning a share buyback scheme to support its share price.
It will purchase 100 million shares at between NT$21.05 and NT$33.24 from today to July 13, which is estimated to cost NT$46.02 billion at most, the company said in a filing to the Taiwan Stock Exchange.
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