Hynix reports second straight quarterly profit on chip price hike

(ATTN: ADDS overview in para 2,3; ADDS share price in para 8; ADDS remarks in para
12,13; TRIMS)
By Lee Youkyung
SEOUL, Jan. 21 (Yonhap) - Hynix Semiconductor Inc., the world's second-largest
chipmaker, said Thursday that it posted a second straight quarter of net profit
in the fourth quarter of 2009 after seven consecutive quarterly losses thanks to
a rise in memory chip prices.
The company also gave a rosy outlook for the first quarter of this year as strong
demand for personal computers and a rapid growth of the smartphone market is
expected to lift shipments of dynamic random access memory (DRAM) chips and NAND
flash memory.
The semiconductor industry is on its way to a recovery from a severe slowdown in
2008, with analysts anticipating the rebound to pick up pace as PC demand is
expected to lift memory chip sales in the first half of this year.
Net profit reached 657 billion won (US$578 million) in the October-December
period, compared with a net loss of 1.69 trillion won a year ago, Hynix said in a
regulatory filing. The company's fourth-quarter net income nearly tripled from
the previous quarter, it added.
Sales surged 85 percent on-year to 2.8 trillion won in the cited period, while
the company recorded an operating profit of 708 billion won, compared with an
operating loss of 802 billion won a year ago.
The figures are consolidated, meaning they include financial results of Hynix and
its overseas units.
The fourth-quarter bottom line was slightly above the median forecast of 633.7
billion won in a survey by Fn guide, an online financial information provider.
Sales also topped the analysts' consensus of 2.67 trillion won.
Shares of Hynix closed at 25,950 won on the Seoul bourse, up 2.17 percent from
Wednesday's close, outpacing the key index's 0.45 percent gain.
For the whole of 2009, Hynix narrowed its net loss to 333 billion won from 4.75
trillion won in 2008. The company also posted an operating profit of 192 billion
won, a turnaround from an operating loss of 1.9 trillion won a year ago. Sales
rose 16 percent year-on-year to 7.9 trillion won.
Hynix is expected to post record sales and profits in 2010 on a bullish outlook
for the semiconductor industry, as global demand for personal computers remains
strong and the possibility of a glut in supplies is mild, analysts said.
"As the worldwide economy has entered into a recovery phase, DRAM demand is
expected to show strong growth this year," Kim Min-chul, the company's chief
finance officer, told investors in a conference call. "As the strong growth
momentum of smartphones continues to accelerate, mobile applications are expected
to drive NAND flash demand."
Global PC manufacturers will likely expand production in the first half of 2010,
as demand surges during the lunar new year in China and as Windows 7 boosts the
launch of new models. The PC industry is projected to grow 13 percent this year
from a year earlier, according to industry data, while the expected increase in
corporate spending in the information technology sector is also positive news for
chip manufacturers.
Analysts forecast that DRAM supply growth will be limited in early 2010 as
second-tier chipmakers have not fully returned to production levels seen before
cutbacks made during the 2008-2009 slowdown.
Hynix recently revised up its capital expenditure plan for this year to 2.3
trillion won from the previous 1.5 trillion won, which is likely to help further
consolidate its leading position, analysts said.
"Top-tier makers will be able to further differentiate their competitiveness from
second-tier firms," said James Song, an analyst at Daewoo Securities Co., in a
report.
Hynix said it will spend the additional revenue on increasing NAND flash memory
production as the rapid growth of the smartphone market and the release of the
tablet PC are likely to drive NAND demand.
Creditors-turned-shareholders of Hynix have put their 28-percent stake up for
sale this month for the second time to recoup $4.6 billion they injected to bail
out the chipmaker in the early 2000s. The previous round of stake selling fell
through after Hyosung Group, the sole bidder for Hynix, dropped its bid in
November.
ylee@yna.co.kr
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