IC design house MediaTek has reiterated that its previous guidance for a sequential 7-14% drop in revenues for the first quarter of 2011 remains unchanged. In addition, the company said it has no plans to carry out a stock buyback program in order to shore up its share price.
MediaTek estimated consolidated revenues for the first quarter of 2011 at NT$19.5-21 billion (US$658-708 million), down from NT$22.68 billion in the fourth quarter of 2010. Some market observers predict that MediaTek may miss the guidance, but some believe the company will manage to meet its low-end target.
Nonetheless, the general market consensus is that MediaTek will likely have a dull first half of 2011.
MediaTek said it expects sales and gross margin performance to rebound in the third quarter, as handset clients will step up the pace of rebuilding inventory.
MediaTek also indicated it is scheduled to launch new 2.5G and 3.5G single-chip solutions, and smartphone chips in the third quarter. The roll-outs will help improve the company's gross margin performance.
Previous reports cited unnamed sources as saying that MediaTek has found it tougher to further strengthen its market share in China's white-box handset market with 2.5G chips due to rising price competitiveness. The company is also confronting competition from international chipset companies in the higher-end 3G and smartphone solution sector.
MediaTek aims for a sustainable gross margin of over 50%, the company noted. The handset-chip designer saw gross margin decrease to 49.2% in the fourth quarter of 2010 from 52.2% in the prior quarter and 58.7% a year earlier.
MediaTek shares closed up 5% at NT$345.50 (US$11.65) on the Taiwan Stock Exchange (TSE) on March 2.