Chi Mei Optoelectronics (CMO) Q2’08 Large-Area LCD Shipments Increase 19% Q/Q

Chi Mei Optoelectronics (CMO) reported its unaudited Q2’08 earnings results on July 31, 2008. The results are more positive than expected. Here are the details:

  • Net Sales (Revenue): Up 3.7% Q/Q to NT$95,489 million
  • Gross Profit: Down 7.8% Q/Q to NT$21,228 million
  • Operating Income: Down 14.1% Q/Q to NT$15,255 million
  • Net Income: Down 10.2% Q/Q to NT$13,740 million
  • Large-Area LCD Unit Shipments: Up 19% Q/Q to 18.6 million
  • Blended ASP for Large-Area LCD: Down 7.2% Q/Q to US$164

Unit shipments increased 19% Q/Q but all financial measures declined due to ASPs declining by 7.2%. This doesn’t make sense: the offset made by a much stronger performance in unit shipments should lead to positive financial results since ASPs declined only 7.2%. Let’s dig deeper.

Most likely, the composition of LCD panels changed from Q1’08 to Q2’08. For unit shipments to increase 19% Q/Q, ASPs to decline 7.2% Q/Q and revenues to increase only 3.7% Q/Q the mixture of LCDs must have been toward smaller and cheaper panels. This aligns with what is happening in the US retail channel where consumers of LCD TVs are purchasing smaller and more affordable units. If such purchasing behavior can be applied to LCD monitors as well, we can assume that smaller and cheaper LCD monitors are selling much better than larger ones in Q2’08 compared to Q1’08.

The US expected GDP to grow 2.3% in Q2’08 but the results came in at 1.9% fueled by an increase in export sales due to the weak dollar. The stimulus package helped consumers to spend more, but the impact it had on the overall economy is questionable. The 1.9% Q/Q growth in Q2’08 is quite a bit better from Q1’08 where the GDP increased just 0.9%. Some economists are expecting consumer spending for the months of July, August and September to drop significantly. One of the reasons is increased reduced work hours and layoffs by US businesses due to the overall slowdown of the economy. The economy has shed jobs every month in 2008 and a similar slide is expected for July. The Labor Department reported that unemployment benefit claims increased 44,000 to 448,000 last week, the highest level since April 19, 2003, partly due to a special outreach program that Congress passed in June and allows for up to 13 weeks of additional benefits.

Source: CMO, The New York Times

[tags]Chi Mei Optoelectronics, CMO, Display Manufacturer, LCD Manufacturer, LCD TV, CMO Quarterly Results, US Economy, US GDP[/tags]

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