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Thursday, September 27, 2001
 CD-R disc makers face weak earnings despite revenue growth
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Message Text: Taiwanese CD-R disc manufacturers expect to see their revenues grow continuously in September, but their earnings still lag far behind targets set for the year. CMC Magnetics, Ritek and Prodisc Technology’s revenues have been growing since June, and despite the terrorist attacks in the US and Typhoon Nari, they are projecting climbing revenues in September. CMC even predicted that its monthly revenue in the fourth quarter would top NT$2 billion.

Nevertheless, the companies are far behind in achieving their 2001 earnings targets, with Ritek and Prodisc’s earnings for the first three quarters only attaining a little more than 50% of their full-year goals. Ritek’s first-half earnings stood at NT$1.762 billion, and even assuming it reaches its third-quarter earnings forecast of NT$1.4 billion, the NT$3.162 billion total would still leave it far from its full-year target of NT$5.7 billion. Prodisc also announced at its institutional investors meeting that its first to third-quarter earnings would reach only NT$580 million.

Even though most CD-R disc manufacturers see third-quarter earnings increasing substantially from the previous two quarters, unless revenues in the fourth quarter at least match those of the third quarter, they may have to rely on disposing of non-operating investment gains to reach their full-year goals. The companies have been actively developing high gross margin and higher-priced products such as 24x and 32x CD-R and DVD discs. However, contribution from these new products does not seem to be pronounced. Now they can only hope that CD-R disc prices in the fourth quarter can be maintained at third-quarter levels.
 
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