GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Amkor Poised For Growth

August 22, 2014 | About:
mitu77

mitu77

1 followers

The gadgets market division is progressively determined by customer use, where electronic items require more than performance and speed. Some factors like product look and feel, usefulness, time to market and expense are getting to be basic variables and packaging is the real part in conveying answers for the need. Consumer electronics are changing how semiconductor devices are thinned, die attached and bonding wire and encapsulated, with materials playing a major role enabling the development of newer packaging technologies. Amkor Technology, Inc. (AMKR) is a leading provider of semiconductor packaging and test services to semiconductor companies and electronics OEMs. Amkor is constantly adapting to various factors to make its presence felt in the semiconductor packaging market.

The company recently declared second quarter financial results for fiscal 2014 which turned out to be solid and consistent with expectations. Sales were up 10% sequentially and 3% year-over-year with a corresponding improvement in gross margin. The company seems to be poised at a rapid growth rate, faster than the semiconductor industry in 2014 and also improve its profitability.

Net sales increased to $767 million as compared to $746 million in the same period last year. Net income grew by 66% to record $50 million as compared to $30 million year-over-year. Second quarter 2014 net income includes a net gain of $18 million related to the sale of a subsidiary to J-Devices. Gross margin grew by 1.1% to 19.6% as against 18.5% sequentially and year over year.

Earnings Per Diluted Share: $0.21, compared to earnings per diluted share of $0.09 in the prior quarter, and $0.14 in the second quarter of 2013. Second quarter 2014 earnings per diluted share includes $0.08 related to the sale of a subsidiary to J-Devices

"We delivered solid second quarter results that were," said Steve Kelley, Amkor's president and chief executive officer.

Resolved patent litigation provides tailwind to revenue

Amkor and Carsem mutually declared the settlement of the suit started by Amkor against Carsem affirming encroachment of Amkor's Microleadframe® (MLF) licenses. Both Amkor and Carsem have entered into settlement consent to end all pending processes identified with the debate and Carsem will pay Amkor a concurred total for such a settlement. With this settlement, Amkor’s customers can have higher benefits of the license which will further provide tailwind to the top line of Amkor

Higher brand value with Intel’s endorsement

Amkor has been a key accomplice to Intel by giving Intel's bundling assembly and testing facilities. Intel perceives Amkor's duties in furnishing heading engineering with phenomenal quality while keeping up incredible backing as for accessibility, expense and maintainability. Intel is now looking forward in cooperating with Amkor and to their ceaseless accomplishment in 2014. Intel now endorses Amkor as one of 18 companies receiving Intel Corporation’s Preferred Quality Supplier (PQS) award for their performance in 2013.

Outlook

For fiscal 2014 the company anticipates a growth which can be faster than the overall semiconductor market. This assumption of the company is based on the fact that various customers are now shifting to wafer level packaging as it helps in cost saving. Amkor seems to be confident about its growth in the future. It anticipates setting record sales in the next quarter and also a solid second half of fiscal 2014. Amkor anticipates net sales in the range of $815 million to $865 million, up 6% to 13% from both the prior quarter and year-over-year. The launch of flagship cell phones with high Amkor substance is also relied upon to drive the sales growth in the third quarter. Net income is anticipated to be in the range of $47 million to $70 million.

Amkor stays focused with its investment on advanced package capacity and leading edge testers. The demand for this capacity is spread crosswise over numerous clients and is accepted that these investments will be the establishment for its long haul development. Owing to the anticipated growth of sales from the customer driven opportunities in first half of 2105, Amkor has increased its capital expenditure budget to $675 million for the fiscal 2014.

Conclusion

Amkor's valuation seems reasonable, and its growth prospects are such that the forward P/E is under five at the moment. The company also provides a growth oriented guidance in its third-quarter, which represent a solid advance. This stock is certainly worthy to be in your portfolio for a long haul.


Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK