From Tom Hua's thread:
To:Paul Kern who wrote (8497)
From: Tom Hua Friday, Apr 20, 2001 2:29 PM
Respond to of 8499
April 20, 2001
Chartered Semiconductor Expects
Loss to Widen in Second Quarter
By Hasan Jafri and Chiong Woan Shin
Dow Jones Newswires
SINGAPORE -- Things are going to get worse before they get
better. That's the message Singapore's Chartered Semiconductor
Manufacturing Ltd. sent Friday after it reported a loss of $31
million in the first quarter ended March 31.
Four analysts polled by Dow Jones Newswires had expected a
loss of US$31.2 million.
Chartered said the loss will widen in the second quarter to
between 50 U.S. cents and 52 U.S. cents an American
Depositary Share, compared with an income of 43 U.S. cents
an ADS a year ago.
The chip maker early Friday reported a first quarter loss of 22
U.S. cents an ADS, compared with earnings of 30 U.S. cents
an ADS and 29 U.S. cents a diluted ADS a year earlier. The
first quarter loss is within the company's guidance, but the
question is what the rest of the year holds, said Lim Fang Suan,
a fund manager at SG Asset Management in Singapore.
Beyond the second quarter, the outlook is still hazy, Chartered
President and Chief Executive Barry Waite said in a conference
call with journalists and analysts.
Chartered also said it is again scaling back capital expenditure
as it attempts to ride the downturn. It will spend US$1 billion
this year, down from an earlier forecast of US$1.2 billion, and
up US$89 million from an investment of US$911 million a year
earlier.
Planned investment for Feb. 7, the company's first 300mm fab,
hasn't changed and pilot production remains scheduled for
mid-2002, Chartered said.
Sales in the first quarter fell 13% to US$206.7 million, in line
with Chartered's revised forecast of US$207 million.
Though the outlook for the second half is hazy, Mr. Waite
offered some cautious hope. "We've received indications from a
few of our customers that there's high growth expectation in the
second half," he said. "Yet we are discounting that, based on
the economic outlook and to be conservative."
Gregory Yap, head of research at OCBC Investment Research
in Singapore, says the outlook could improve as the U.S.
interest-rate cuts begin to work through the financial system.
Whether sales improve or not, pricing will remain under
pressure, he added. The average selling price of Chartered's
wafers fell nearly 5% to US$1,242 in the first quarter while
wafer shipments fell 21% to 166,400.
Chartered has been badly hurt by sharp spending cuts by
telecommunications and computer makers who are depleting
inventories before ordering more from the world's third largest
custom chip maker.
Despite the bleeding, Chartered has no intention of changing its
strategy to attract more business from the communications
sector, which already provides 49% of its revenue. "This
[communications] is still the fastest-growing sector ... it just
happens that it is new and less mature than say the PC
industry," Mr. Waite said after the earnings release. "So it
doesn't have the systems in place and therefore it has a more
severe inventory issue."
Analysts agree. "In the long run there is no argument that the PC
space will not see that much incremental growth," said Mr. Yap
who last week upgraded his recommendation to a market
perform, from market underperform. "The market realizes this is
an immature space and there is bound to be some volatility."
Write to Hasan Jafri at hasan.jafri@dowjones.com and Chiong
Woan Shin at chiong.woan-shin@dowjones.com . |
