United Micro Electronics
, the second-biggest made-to-order chipmaker, reported improved quarterly earnings that beat expectations, and said it is optimistic about further growth in the communication sector.
For the third quarter, the company earned almost $124 million, or 4 cents a share, on revenue of $638 million, sharply higher than the $42 million the company earned on revenue of $608 million in the year-ago period. Most of the gain was because of non-operating income from the disposal of investments and dividends. Otherwise, revenue was down slightly. Analysts polled by First Call had expected the company to earn 2 cents a share on revenue of $608 million.
The company said it is optimistic about sales volume and anticipates shipments in the fourth quarter to be 10% higher than a year ago. Management said, "demand for communications chips recovered strongly late in the third quarter. For the remainder of the year, we expect communications to be the strongest performing segment followed by the consumer and PC sectors."
The company also has aggressive capital spending plans with more than a billion dollars allocated through the end of 2004, as it anticipates strong growth in consumer products such as cameras and toys.
In the current quarter, 55% of the company's revenue came from chips that power personal computer components or consumer electronics products.
Management did not offer new guidance for the fourth quarter, but analysts are expecting the company to earn 3 cents a share on revenue of $664 million. Recently, the stock was up 14 cents, or 2.6%, at $5.52.
The company trades at a price-to-earnings ratio of about 30 times expected 2004 earnings vs. 24 for
and 51 times expected 2005 earnings for the currently unprofitable