Chartered renews forecasts despite losses


Signs of life from the European cell phone market have Chartered optimistic that it will double quarterly sales, in its fourth quarter

By Ravi Hiranand

SINGAPORE -- Chartered Semiconductor Manufacturing on Friday reiterated its forecast of stronger sales in the second half of the year.

That word comes after the chipmaker reported a net loss of $90.7 million for the second quarter after the U.S. market closed on Thursday.

Both analysts and the company had forecast a heavier loss.

The world's third-largest contract chipmaker saw sales increase by 51 percent to $127.5 million.

In a Friday conference call, management said Chartered sticks to its ambitious goal of doubling revenues in the fourth quarter, compared with the first.

Analysts expected the company to post a loss of between $100.2 million to $116 million for the second quarter, which ended in June.

Chartered lost $128.4 million in the March quarter.

Chartered shares closed down 2.3 percent on the Singapore stock market, at S$3.48. That was on a day the Straits Times index lost 1.25 percent.

Cautious outlook

Despite their bullish sales goal, the company is playing down expectations for future earnings.

CEO Chia Song Hwee reiterated the company's target to double revenues "even though the current market environment makes it somewhat more challenging."

Chia added that the market had become wary of overstocked inventory, wary of repeating the stockpile of 2000.

"It's a tougher goal than when we first set it in April, but with our momentum on 0.18-micron technology and new customers, demand projection from our customer base still supports this goal," he said in a release.

That 0.18-micron technology refers to leaving less space between transistors on a chip, making the chip faster and more efficient.

Chia also pointed toward Europe as a region for growth, after positive signs from the release of new cell phone models there.

Analysts not impressed

The online research arm of Kim Eng Securities, kelive.com, noted that despite the better than expected second-quarter results, Chartered has no long-term competitive advantage.

"Losses continue to pile up and the company remains a few products cycles behind its rivals on the technology curve," it stated in an online report.

TSMC and UMC in Taiwan lead the global chip-foundry industry (full story).

Kelive.com called Chartered's third-quarter guidance "uninspiring." The research house rated it a "trading buy."

Chartered expects another net loss of $87 million to $90 million for the third quarter, ending September 30. The company also expects revenue to rise five percent from the previous quarter.