E Ink shares tumble on worse-than-expected sales

Many investors fear that the current slow-season effect will continue to impact E Ink's shipments and further drag down the company's sales for the first quarter of this year, they said.

At the end of trade, E Ink shares closed at NT$35.75, down by its 7-percent daily limit.

E Ink reported Friday its December consolidated sales totaled NT$1.59 billion, down 55 percent from November and also down 57 percent from a year earlier.

In the fourth quarter, the e-paper display supplier registered NT$10.49 percent in consolidated sales, down 4 percent from the third quarter.

For the entire 2011, the company posted NT$38.43 billion in consolidated sales, up 53 percent from a year ago.

“After its sales peaked in October, the effect of a slow season set in to affect E Ink's shipments in the following months,” Concord Securities analyst Henry Sun said.

“However, the 55-percent month-on-month sales decline in December was steeper than a previous estimate of about 20 percent by the market,” Sun said. “That's why the stock now comes under heavy selling pressure.”

Huang said the selling largely came from institutional investors who had held a large chunk of E Ink shares, referring to the large trading volume.

Huang said his brokerage is planning to cut its forecast of E Ink's earnings per share for 2011 after the sharp decline in sales for December from about NT$8 to a range of NT$6 to NT$7 to reflect the market reality.

However, the expected downgrade is still higher than NT$3.81 in EPS recorded in 2010. E Ink Chairman Scott Liu said its customers have turned cautious about the industry's outlook as uncertainty over the global economy still overshadowed market sentiment.

E Ink's major customers include Amazon, Casio, Hitachi, Sony and Samsung.

“The disappointing revenue data for December has promoted many investors to embrace deeper worries over the company's sales for the first quarter of this year on the slow season impact,” Sun said. “It is likely that the impact will continue into the second quarter.”

The market has expected E Ink will encounter a double-digit decline in sales for the January-March period from a quarter earlier.

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