Monday November 26 2:21 PM ET
ESS Technology Raises Outlook as DVD Market Booms
FREMONT, Calif. (Reuters) - ESS Technology Inc. (Nasdaq:ESST - news), which makes microchips that power DVD players, raised its fourth-quarter earnings forecast on Monday, buoyed by growing market share and better-than-expected sales of DVD players.
Sales of DVDs and players are breaking records as the newer technology's popularity approaches that of video.
Fremont, California-based ESS, which makes chips used in audio, video and computer products, forecast fourth-quarter net income from 22 cents to 24 cents per diluted share, compared with an earlier forecast of 17 to 22 cents per share.
Fourth-quarter revenues should range from $74 million to $76 million, compared with earlier estimates of $68 million to $74 million, it said.
``We believe our fourth quarter DVD shipments will set another record,'' Chief Executive Robert Blair said in a statement. ESS is also gaining market share, he said.
The company will issue additional guidance when it posts fourth-quarter results in January 2002, he said.
ESS shares rallied $2.77, or 17 percent, to $18.87 by early afternoon on the Nasdaq. Earlier in the day they hit $18.95, above a year-high of $18.24.
The DVD market is exploding this year, with some 170 million disks expected to be sold in the three months ending Dec. 31, up from 76 million in the third quarter, the DVD Entertainment Group has forecast.
Some 400 million DVDs will be sold this year, compared with roughly 227 million in 2000.
ESS provides the chips that run the players, and that market is rapidly expanding as prices for basic machines drop below $100.
There are already about 22 million players in U.S. households and the DVD Entertainment Group forecast shipments could total 30 million by year's end.
Studios are heavily marketing the DVD release of hit movies, such as the animated feature ``Shrek'', which raked in $110 million in its ``opening'' weekend on DVD and video.
DVDs contributed around half that revenue, with 2.5 million units sold at around $20 each. |
