Chartered is likely to report it lost US$33 million, or US$0.24 for every American depositary receipt, in the three months ended March, from a profit of US$37.8 million, or US$0.29, a year ago, according to the average estimate of six analysts surveyed by Bloomberg. Estimates ranged from a loss of US$0.224 to US$0.25. The results are expected after US markets close today.
The Singapore-based company said two months ago it expected a first-quarter loss of between US$0.22 and US$0.24, citing weak economic performance and slack demand. Analysts say Chartered will struggle to recover from its first quarterly loss in six quarters as conditions are unlikely to soon improve.
"We are looking at a recovery nearer to the end of the third quarter--the second quarter will be worse than the first,"' said Chua Wee Thia, an analyst at Vickers Ballas Investment Research Pte Ltd in Singapore, who rates the stock "neutral." "The overall industry hasn't picked up."
Chartered's biggest customers are suffering from weaker orders for their products. Analysts, in turn, are expecting them to slash orders from Chartered.
Customers
Chartered's five biggest customers by sales--Ericsson, Broadcom, Conexant Systems, Agilent Technologies and STMicroelectronics--have this year either revised their sales or profit estimates, or fired workers.
"We still have a long way to go," said Bhavin Shah, an analyst at Credit Suisse First Boston in Hong Kong. "Foundries will continue to see lower wafer shipments and as a result, lower utilization."
Chartered's utilization, or how efficiently it uses its production equipment, stands at about 40 percent, analysts estimate. That means more than half its equipment isn't being used. The company also said in February first quarter sales would fall 35 percent from the fourth quarter to US$207 million.
The company, which is building a US$3.5 billion plant in Singapore, is also expected to cut its planned US$1.5 billion in spending this year. Analysts estimate a cut of between US$300 million and US$400 million.
Technology
Less spending may hurt plans for the new plant, which will make 300-millimeter, or 12-inch, wafers instead of the eight-inch standard. Chips are cut out of wafers, and are used to power electronics devices such as cell phones. Larger wafers mean more chips can be cut, making the chipmaking process more efficient.
Any delay in spending will also widen the gap between Chartered and its two biggest rivals, Taiwan Semiconductor Manufacturing Co and United Microelectronics Corp in Taiwan. The two Taiwanese companies are expected to be profitable.
"What bothers me about Chartered is it's behind TSMC and UMC in terms of technology, most particularly in its migration to 300- millimeter," said Russell Tan, an analyst at Net Research Asia in Singapore. "They're one-and-a-half years behind."
Chartered's shares traded in Singapore have fallen about 1.7 percent this year, making it the second-worst performer on the Bloomberg Asia Pacific Semiconductors Index, which has risen 17 percent. Chartered's American depositary receipts, which are traded in the US, are blocks of 10 shares each.
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