E Ink Holdings Co (元太科技), which supplies e-paper displays for Amazon.com Inc’s Kindle series, yesterday said revenue this quarter is expected to grow 20 percent quarterly, aided by seasonal demand.
“The third quarter will be a better growth season than the second quarter,” E Ink financial executive Lloyd Chen (陳樂群) told investors during a teleconference. “On an annual basis, revenue growth this quarter will be flattish.”
The company reported NT$4.32 billion (US$138 million) in revenue in the third quarter last year.
Gross margin is expected to be more than 30 percent this quarter, as the company is diminishing its low-margin LCD panel business to ultimately exit the market, Chen said.
The forecast is considered conservative by three analysts who attended yesterday’s teleconference. Chen said that it is the company’s goal to keep gross margin at about 30 percent and E Ink has done better in the past four quarters.
During the quarter ending June 30, gross margin climbed to a record high of 39.13 percent, from 29.48 percent in the first quarter, the company’s financial statement showed.
Chen attributed the improvement to sales contributions from higher-margin products, such as e-paper displays for e-tags used in luggage and retailers’ shelves, wearable devices and mobile phones. E-paper displays for electronic readers still contributed 70 percent to E Ink’s revenue last quarter.
High gross margins and increased royalties helped E Ink return to the black last quarter, with operating income swinging back to a profit for the first time in two years to NT$171 million. The company posted an operating loss of NT$495 million in the first quarter.
Net profit was NT$780 million last quarter, reversing a quarterly loss of NT$237 million in the first quarter, while revenue surged 43.2 percent quarter-on-quarter from NT$2.5 billion to NT$3.59 billion.
“The numbers are encouraging both on its core business and royalty income. The gross margin was a nice surprise,” Yuanta Securities Co (元大證券) analyst George Chang (張家麒) said in a client note.
E Ink’s gross margin last quarter would likely be 33 percent, he said.
Royalty fees helped boost the company’s non-operating income to NT$879 million last quarter, from NT$328 million a quarter earlier, financial statements showed.
However, Chen still expects royalties for the year to shrink from last year’s NT$3 billion, citing growing competition from organic LED display technology.
E Ink charges royalty fees by licensing high-resolution fringe-field-switching LCD technology.
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