D-Link 2013 Q2 Operation Review

2013-08-14

For the second quarter 2013, net revenue was NT$7.224 billion, at the same level as in prior quarter but down 6.4% YoY partly due to distributors in the emerging markets adjusting inventory level to reduce FX risk caused by weakening local currency.   Telco projects pull-in also remained slow this quarter reflecting conservative market outlook thus constrained CAPEX’s spending.  Gross margin excluding inventory provisional gain/loss was NT$1.947 billion or 27.0% as compared to 28.0% QoQ as a result of the margin impact from the strong dollar.  Gross margin including inventory provisional gain/loss was NT$1.841 billion or 25.5% in 2Q13, as compared to 27.2% in 1Q13.  Increased inventory provision took into effect the financial impact from one of our technology partner’s decision to stop its Cloud DVR support.  Operating expenses were NT$1.988 billion or 27.5% of net revenue as compared to 25.3% of previous quarter.   Net non-operating profit in 2Q13 was NT$24 million comprising of NT$30 million income recognized from long term investee companies under equity method, NT$76 million capital gain, NT$105 million in foreign exchange loss, and NT$23 million derived from financial and other income.  The Group’s second quarter consolidated net income after tax and minority interest was negative NT$110 million and EPS was negative NT$0.18 per share based on weighted average capital of NT$6.124 billion.