MediaTek estimates its fourth-quarter revenues will be between NT$22.5 billion (US$739 million) and NT$24 billion, down 15-20% sequentially. The chip design house also expects its gross margin to slide 1- to 2-percentage points on quarter to 49-51%.
As the fourth quarter is the traditional low season, MediaTek will be more active in launching some price-cutting strategies to stimulate end-market demand, and is working with optical storage customers on clearing inventory, according to company president Hsieh Chin-chiang.
MediaTek announced revenues for the third quarter slid 5.9% sequentially and 18% on year to NT$28.18 million. The company indicated that high inventory levels at clients in both optical storage and flat-panel TV markets discouraged them to place new orders. Meanwhile, revenues were dragged down due to declining ASP for handset chips and inventory correction among India-based handset customers.
MediaTek saw its gross margin slide to 52.2% in the third quarter, down 2.8pp on quarter and 8pp on year. The company attributed the margin erosion to its lower ASP. Net income for the quarter decreased 22.8% sequentially to NT$6.97 billion, which translated into an EPS of NT$6.41 compared to the NT$8.30 posted in the second quarter.
Due to licensing fees for the LTE technology, MediaTek's operating expenses climbed to about NT$7.8 billion that affected its profitability during the third quarter, company CFO Mingto Yu said. MediaTek in July entered into a licensing agreement with NTT DoCoMo regarding "LTE-PF," a mobile-terminal platform based on Long Term Evolution (LTE).