ChipMOS Q3 Profit Beats View; To Merge Units, Approves Stock Buyback

(RTTNews) - ChipMOS Technologies Bermuda Ltd (IMOS), a provider of semiconductor assembly and test services, on Wednesday reported a 30 percent increase in profit for the third quarter from last year, reflecting higher revenues and margins.

Further, ChipMOS said its board of directors has approved a proposed plan to merge its subsidiaries, ChipMOS Technologies or ChipMOS Taiwan and ThaiLin Semiconductor Corp. The board also approved the repurchase of $15 million of the company's common stock.

The financial results of ChipMOS for the latest quarter included the financial results of ChipMOS Technologies, ChipMOS U.S.A., Inc., ThaiLin Semiconductor Corp. and Modern Mind Technology Ltd. and its wholly-owned subsidiary ChipMOS Technologies (Shanghai) Ltd.

The company's third-quarter net earnings attributable to equity holders were $18.8 million or $0.62 per share, up from $14.5 million or $0.48 per share in the same period last year. On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.55 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter grew 14 percent to $190.7 million from $167.9 million in the prior-year period. Analysts had a consensus revenue estimate of $190 million for the quarter.

Gross margin improved to 25.8 percent from 23.6 percent in the year-ago period.

S.J. Cheng, Chairman and Chief Executive Officer of ChipMOS, said, "We continue to benefit from growth in our DRAM and LCD driver businesses, which grew 5.1% and 6.6%, respectively, compared to the second quarter of 2014."

Looking ahead to the fourth quarter, ChipMOS forecast revenues to be flat to down in the low-single digits compared with the sequential third quarter and gross margin in a range of 23 percent to 26 percent. Analysts expect the company to report revenues of $185.3 million for the quarter.

The company said it expects continued stability in 2015, as it leverages its integrated assembly and test business strategy.

ChipMOS said its board of directors has approved a proposed plan to merge its subsidiaries, ChipMOS Technologies or ChipMOS Taiwan, and ThaiLin Semiconductor Corp. The boards of both subsidiaries have also approved the merger.

Upon consummation, the merged entity would become a 58 percent owned subsidiary of ChipMOS Technologies Bermuda Ltd. The proposed merger of the two subsidiaries is part of the company's ongoing efforts to streamline its corporate and financial structure in order to better maximize potential efficiencies and to further build shareholder value.

Under the terms of the merger deal, ThaiLin's shareholders will be offered a combination of NT$12.5 in cash and 0.311 of one ChipMOS Taiwan share in exchange for each ThaiLin common share held.

On consummation of the proposed merger, ThaiLin will be merged with ChipMOS Taiwan. ChipMOS Taiwan will continue as the surviving merged entity and is expected to remain listed on the Taiwan Stock Exchange trading under its current stock ticker "8150".

The deal is subject to the approval of more than 50 percent of both ChipMOS Taiwan and ThaiLin shareholders entitled to vote at the respective special general meetings to be held on December 30, 2014. The company expects completion of the merger to occur in June 2015.

ChipMOS Technologies also said that its board of directors has authorized the repurchase of $15.0 million of the company's common stock from the open market. The repurchased shares will be retired and canceled.

IMOS closed Wednesday's trading at $21.80. In after-hours, the stock gained $0.95 or 4.36 percent to $22.75.