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September 20, 2017

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MediaTek's shares see rocky trading in spite of Q2 results

TAIPEI, Taiwan -- MediaTek (聯發科), a fabless semiconductor company and system-on-chip (SOC) solution provider yesterday reported its operating results over the second quarter, recording revenues of NT$54.133 billion and after-tax net income of NT$12.549 billion, improving by 17.66 and 23.8 percent quarter-on-quarter, respectively, at the firm's earnings conference.

Second quarter earnings-per-share for the company rated at NT$8.03, and NT$14.85 over the first six months of this year.

Despite the company's encouraging performance over the second quarter, MediaTek shares yesterday fell by 6.57 percent, losing NT$33 to close at NT$469.

The company yesterday provided a more reserved outlook on prospects over the third quarter, expecting revenues to grow by 5 to 13 percent to reach between NT$56.8 billion and NT$61.2 billion and achieve profit margins of about 48.5 percent, while raising anticipated shipping volume of smartphone chips to 100 million units.

Meanwhile, institutional investors are scrutinizing upcoming factors for the company, including the mass production schedule of its 4G-capable MT6595 and MT6752 SOCs, the impact of anticipated in-government handset subsidies from 3G to 4G smartphones, and anticipated price-cutting competition from Qualcomm as the U.S.-based company responds to a monopoly crackdown enacted by regulators in China, in addition to misgivings over whether the company can sustain sales levels in the low season from the fourth quarter of this year to the first quarter of next year.

A number of foreign institutional investors such as Barclays PLC and Nomura Securities indicated a more upbeat outlook for the company in the third quarter, announcing that they expect a 6 to 14 percent and 5 to 15 percent quarter-on-quarter improvement over the period, respectively. Nomura Securities, however, stated that as the company transitions toward providing 4G SOCs, profit margins may be constrained early in the endeavor and may require a lengthy adjustment period.

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