E Ink Holdings Inc (元太科技), the world’s No. 1 e-paper display maker, yesterday said operating income spiked 76 percent last quarter, thanks to strong demand for e-readers such as the Kindle from online bookstore operator Amazon.
Operating income surged to NT$1.13 billion (US$35.5 million) in the second quarter, compared with NT$644 million in the first quarter, after gross margin rose to set an all-time high of 39.6 percent. Gross margin stood at 29.7 percent in the first three months of the year.
Rising shipments of better-price e-paper displays and high-end flat panels used in Apple Inc’s iPad tablet device were major factors behind its strong growth in operating income, E Ink Holdings said. The firm did not disclose shipment figures.
Net income, however, fell slightly by 0.6 percent at a quarterly rate to NT$700 million during the period from April to June from the first quarter’s NT$704 million, which included a one-off of NT$300 million in royalties charges, primarily from South Korean LCD panel maker LG Display Co.
A year ago, E Ink lost NT$955 million.
“We are very satisfied with the growth of e-reader sales ... Amazon’s new Kindle is outfitted with our new-generation Pearl e-paper display and supply could become tight as pre-sales are excellent,” company chairman Scott Liu (劉思誠) told investors.
That, to some extent, countered concerns about iPad’s erosion of consumer support for e-readers, said Liu, adding that the Kindle and the iPad were two distinct devices in terms of features and targeted users.
E Ink commands more than 90 percent of the e-paper display market around the world.
Good uptake of e-readers and a rising share in high-margin products, such as high-end LCD panels made on key technology from its South Korean unit Hydis Technology Co, have helped push the higher gross margin, Liu said.
Hydis had swung into profit in April after switching its products to e-paper displays and high-end LCD panels, he said.
Looking ahead, Liu said revenues would pick up this month, leading to growth of between 40 percent and 50 percent in the second half of the year, compared with NT$10.18 billion made in the first half, on the back of the US holiday shopping season.
Sixty-five percent of the company’s revenue came from e-paper displays and it has not seen substantial progress by rivals.
Liu said his company was ready with colored e-paper displays and he expected China’s e-reader maker Hanvon Technology Co (漢王科技) to become the first company using the displays.
Sales of global e-readers are expected to double to 20 million units next year as retail price has fallen to less than US$200 plus contract service, Liu said.
Shares of E Ink plunged 2.92 percent to NT$46.6, under-performing the benchmark TAIEX, which slid 0.72 percent yesterday.
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