SINGAPORE (Dow Jones)--Chartered Semiconductor Manufacturing Ltd. (C27.SG) reported second quarter earnings at the low end of guidance and warned of a weak third quarter as consumer demand for video game consoles slackens.
Net profit for the quarter ended June 30 was $12.3 million, a turnaround from a loss of $67.1 million a year earlier, the Singapore-based contract chip maker said in a statement Friday.
The company had forecast a net profit of $16 million plus or minus $5 million. A Dow Jones Newswires poll of 3 analysts on average forecast a net profit of $21.1 million.
Revenue rose 88% from a year earlier to $364.8 million, helped by demand for semiconductors for consumer electronics and from the communications and computer sectors.
Chartered forecast a third quarter net profit of $11 million plus or minus $5 million. Revenue is forecast at $363 million plus or minus $6 million.
At 0140 GMT, shares in Chartered were down 6.7% at S$1.25.
OCBC Investment Research said it is reviewing its buy call and S$1.86 price target on Chartered following the "disappointing" result and "tepid" third quarter outlook
An OCBC analyst said in a note that news Chartered has started shipments of chips for Advanced Micro Devices Inc. (AMD) is positive but margins may be thin because of the threat of a "severe price war" between AMD and Intel Corp. (INTC).
Chartered Chief Financial Officer George Thomas said the outlook for the third quarter is "now weaker than what we had anticipated earlier."
In the early stages of the third quarter the company is seeing changes in the outlook of customers, with some cautious about inventory levels and some reacting to softer-than-usual demand from their markets, he said.
Revenue for the third quarter is likely to be "essentially" flat compared with the second quarter due to a decline in revenue from the chips used in video game devices such as Microsoft Corp.''s (MSFT) Xbox.
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Great...I wanted to dump it off at $1.9. But it looks like its another 12 months wait for better market sentiments.
