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Chartered warns on Q2 profit, keeps net forecast
SINGAPORE, June 10 - Chartered Semiconductor Manufacturing warned that its gross profit will fall by approximately $15 million on higher costs in the second quarter, but maintained its net profit forecast due to a tax writeback.
Dealers said that the profit warning would likely send Chartered's share price lower.
"Our business outlook remains essentially unchanged. However, we expect our gross profit to be lower by approximately $15 million compared to the midpoint of our prior guidance, due to increased costs," said George Thomas, CFO of Chartered said in a statement.
Despite the lower gross profit estimate, Chartered reaffirmed its net income guidance given on April 25, saying a tax credit will offset the fall in gross profit. Chartered had forecast second quarter net income at about $6 million, plus or minus $5 million.
Chartered plans to release second quarter 2008 results on Friday, July 25.
A dealer at a Singapore-based brokerage firm said that the guidance may pull down the share price, but medium-term Chartered is still attractive because of speculation that it is a takeover target.
"Share price may come off, but in recent times people buy the stock not for its operating performance, but because the company is a target for takeover," the dealer, who asked not to be named, said. Chartered closed at S$0.86 Monday, down 2.8 percent in the wake of a broader market decline.
Last month Chartered said it was open to strategic investors and remained on the lookout to acquire new factory capacity worldwide.
In the first quarter, Chartered posted a 62 percent drop in quarterly profit on as demand for video game consoles, personal computers and communication equipment weakened.
The Singapore-based company posted a first-quarter net profit of $2.4 million, or nil per diluted American Depositary Share , compared with a net profit of $6.3 million, or 2 cents per ADS, in the year-ago period.
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