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Mediatek keeps high earnings despite the year-end low season

Mediatek (聯發科) yesterday announced consolidated revenues of NT$12.82 billion for November, up 48.18 percent year-on-year, inline with previous expectations that the company will maintain high sales volume amid the sector-wide year-end low season.

Despite a 7.67 percent decline from October's record high NT$13.88 billion, the company in November recorded its fifth highest monthly sales.

Based on the company's pace in earnings recorded in October and November, Mediatek may easily achieve its target sales target for the final quarter of this year if sales in December surpass the modest NT$10.4 billion benchmark, said institutional investors.

In November, the company unveiled its eight-core MT6592 mobile device processor, while forecasting sales to reach an encouraging NT$39 billion in the fourth quarter, on par with the previous period on the back of brisk global demand for smart phones.

By convention, the fourth quarter usually spells a lull for the integrated circuit (IC) design sector, said Huang Wen-ching (黃文清), a Taishin Securities Investment Advisory (TSIA, 台新投顧) analyst. According to Huang, the company was able to maintain sales momentum in the year-end low season thanks to its sound strategy in releasing its eight-cored processor for the China market in November. The move exploited the misstep of its most significant competitor Qualcomm, said Huang, as the competitively priced MT6592 chip had been well received by the market since its launch.

In the period beginning in January next year to the conclusion of the Chinese New Year's holidays, the investing public are advised to monitor the amount of orders given by Mediatek's major clients in China including ZTE Corp. (中興), Huawei (華為) and Lenovo (聯想), said Huang, as the outcome will likely play a pivotal role in the company's first quarter results. Huang, however, noted that China Mobile (中國移動), the largest telecoms carrier across the strait, is scheduled to begin distributing Apple's popular iPhone 5S and 5C handsets, which may affect sales of domestic branded models sporting Mediatek's processors in the first half of 2014.

Market analysts told the Central News Agency that following Chinese buyers' restocking for the holiday, MediaTek started feeling the impact of slow season effects in November and the drag is expected to continue to affect consolidated sales this month.

Shares of MediaTek fell 0.12 percent to close at NT$430 yesterday as investors took cues from the November decline. The weighted index on the Taiwan Stock Exchange ended down 0.09 percent.

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