Mediatek reported May revenue of NT$2.1bn, down 23% MoM, but in line with latest expectations in the market. The slowdown was mainly caused by negative seasonal demand for CD-ROM, DVD ROM and CD-R/RW. Notwithstanding, demand for DVD player ICs remained relatively strong, despite slight revenue decline.
The company's guidance is for similar revenues in June and shipments to rebound in 3Q02. Consequently, anticipated 2Q revenue to be flat relative to 1Q02 and estimate net profit at NT$3.2bn (EPS of NT$10), given a similar gross margin. From the valuation perspective, the company is very attractive compared to peers. However, there are concernes of a possible price war on DVD ROM and CD-R/RW starting in 3Q02 given both VIA (2388 TT) and Ali (5393 TT) are launching new products in 3Q02. Thus the company's profit growth will be limited in 2003.