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Hynix Q2 result below expectations
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Monday, July 25, 2011
Hynix Semiconductor achieved a sluggish earnings report for the second quarter of this year, hit by lackluster demand for memory chip-embedded consumer products amid a lethargic global economy.
It remains to be seen how this underperformance will affect the sale of the chipmaker, attracting SK Telecom and STX as bidders.
An estimated 180 billion won in stock that Hynix prepared for patents fights with U.S.-based chip designer Rambus has not been cashed in, boosting Hynix’s operating profit for the latest quarter to 447 billion won ($424 million).
On Thursday, the chipmaker reported that its second quarter operating profit more than halved from a year ago to 1.0 trillion won, _ while quarterly sales decreased 16 percent to 2.75 trillion won during the same period.
``The second quarter is usually not the best season for chipmakers. The massive earthquake in Japan lifted the demand for computer memory chips, however, that was short-lived,’’ said Hynix spokesman Son Kyung-bae.
Stock analysts said Hynix’s second quarter profit was below expectations, except for the worth amount of allowances.
Hynix is in an intensive court battle with Rambus after the company accused Hynix of infringing on patents relating to its memory chips and wants them to sign licensing agreements and pay damages.
An appellate court in the U.S. recently ruled that the cases should go back to a lower court since Rambus destroyed potentially vital documents, resulting in a better position for Hynix.
``What’s more problematic is that even value-added chips have seen steep falls in price along with conventional DRAMs and NAND flash memories because of a sluggish market,’’ said Kim Sung-in, a senior analyst at Kium Securities.
It is highly unlikely that Hynix will report hugely-boosted earnings in the third quarter compared to the second because analysts and even some Hynix officials expect chip prices to remain depressed with poor demand with even second-tier chipmakers cutting their output.
``Amid the bearish market, Taiwanese chipmakers are being cornered to secure their key bottom line. It’s not good for the overall picture, however, cuts in production by Taiwanese firms will help the entire market see a rebound in chip prices,’’ said Lee Seung-woo, an analyst at Shinyoung Securities.
Benchmark DRAM prices have fallen over 7 percent in the first half of July alone and market research firms have little doubt that the prices will slide further, threatening third quarter earnings.
Hynix expects its DRAM shipments to grow by only a high-teen percentage in the third quarter, while shipments of NAND flash memories used in smartphones and camcorders will grow by some 20 percent.
The nation’s top carrier SK Telecom and shipbuilding conglomerate STX Group have filed letters of intent (LOIs) for Hynix’s combined 15 percent stake, valued at some $2.5 billion.
``Hynix’s creditors have been known to urge the firm to cut back its investment in facilities to help its sales process get on a faster track. If this is true, then Hynix’s technology leadership could potentially be pulled down,’’ said an industry executive.
By: DocMemory
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