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To: Fabeyes who wrote (40123)	10/18/1998 11:28:00 AM
From: Fabeyes	Respond to of 53903

Taiwan Semicon earnings seen poor, but worst over TAIPEI, Oct 18 (Reuters) - Microchip powerhouse Taiwan Semiconductor Manufacturing Co. was expected to report poor earnings in the third quarter, but analysts said the worst will soon be over. Analysts said the closely watched blue chip, which is due to announce its results Monday, would report its worst quarterly profit of 1998. Taiwan Semicon, which has a listing of American Depositary Receipts on Wall Street, is the world's leading manufacturer of made-to-order "foundry" microchips. On Friday, the company's stock closed 31 cents higher at $12.75 on the New York Stock Exchange. "The third quarter is really the bottom this year," said ING Barings' analyst Donald Floyd. Floyd forecast the semiconductor giant's third quarter net profit at just T$3.0 billion (US$91 million) -- sharply lower than T$3.758 billion in the second quarter and T$6.947 billion in the first quarter. The firm reported a net profit of T$4.6 billion in third quarter 1997. Analysts said the expected profit decline was mainly due to declining sales. Taiwan Semicon's sales dropped a year-on-year by 15.9 percent in July and 2.6 percent in August, but recovered in September with a 5.1 percent annual gain. Taiwan Semicon had said it expected the global semiconductor industry to face continuing challenges in 1998 as Asia's economic slowdown, oversupply in components products and pricing pressures would remain unchanged in the near term. Analysts agreed that the industry would likely remain sluggish but they said Taiwan Semicon's earnings would soon bottom out. "The third quarter is definitely going to be worse than the second quarter," said Polaris Securities' senior analyst Georgiant Ho. "But the good news is -- the worst is now over," Ho said. "Sequentially it's going forward. I am looking for an increased profitability in the fourth quarter," Floyd said. Analysts said they did not expect a dramatic stock selloff in Taiwan Semicon as most investors had already factored in oversupply and a sagging semiconductor industry worldwide. "The market is likely to be neutral to its profit announcement," said Michael On, president of Beyond Asset Management. "Investors know it's not just the problem of Taiwan Semicon. It's mostly the problem of the external environment and the entire semiconductor industry as a whole," On said. Ho of Polaris Securities said it was still worth betting on the company's long-term growth. "We are bullish in Taiwan Semicon's long-term development. It's a company with solid fundamentals and potential. When the industry recovers, it will be the first to benefit," Ho said. nt.excite.com