D-Link 2011 Q3 Operation Review

2011-10-27

For the third quarter of 2011, D-Link posted a net revenue of NT$8.551bln, up 6.6% over 2Q11, but down by 0.4% compared to the year-ago figure primarily due to currency fluctuation. If looking at US$ book, 3Q11’s sales remained up by 9.2% YoY. Due to sudden depreciation of a basket of non-US$ currencies including EUR, CAD, AUD, GBP, etc. at the second half of September,  gross margin excluding inventory related gain/loss dropped 32.7% in 3Q11 from 33.4% in 2Q11, but up by 0.6% compared to 32.1% of the year-ago quarter. By applying Article number 10 of Taiwan’s GAAP, gross margin including inventory provisional gain/loss was 31.5% in 3Q11, down by 1.6% from 33.1% in 2Q11, but up by 0.5% compared to 31.0% of the comparable 2010 quarter. The inventory provisional loss in 3Q11 was NT$101mln primarily due to huge currency fluctuation in emerging markets to reevaluate the inventory and special price offerings for some products in the North America market. Operating expenses of 28.3% of net revenue was down from 29.0% in the previous quarter because of relatively higher sales in 3Q11, or compared to 28.4% in 3Q10. Operating profit margin was 3.2%, down by 0.9% from 4.1% in 2Q11, but up by 0.6% compared to 2.6% in 3Q10.