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ACL Semi Posts Q3

HONG KONG — ACL Semiconductors (OTC Bulletin Board: ACLO), a leading China-based distributor of Samsung memory electronic products in Hong Kong and Southern China, reported financial results for the quarter ended September 30, 2010.

Quarterly Highlights:
• Net revenue up 35% year-over-year to $102.3 million
• Initiated NAND Flash products to capture larger market share
• Over 150 customers in Hong Kong and Southern China

Mr. Alan Yang, Chairman and Chief Executive Officer of ACL Semiconductors, commented, “The third quarter of 2010 demonstrated another quarter of year-over-year revenue growth. Our total revenue was up 34.6% in the quarter ended September 30, 2010, as compared to the same period last year. These outstanding results also reflect the success of our business model and the macro economic factors across Hong Kong and Southern China. Most importantly, we are proud of the distribution and product research we supply to Samsung, as we are positioned to be a leading distributor of Samsung memory products in Southern China. During the quarter, we began to promote Samsung's high density NAND Flash (4GB and above) in order to capture a larger market share as well as to push the high density products to the mainstream market. This promotion was successful, which resulted in our increased sales volume for the quarter.”

For the quarter ended September 30, 2010, ACL Semiconductors reported net revenue of $102.3 million, an increase from $76.0 million, or 34.6%, compared to the same period last year. The year-over-year revenue growth was primarily due to an increase of sales volume in the PRC market. Net loss for the quarter ended September 30, 2010 was $77,000, compared to net income of $1.0 million in the same period last year. The net loss resulted primarily from increased pricing pressure on our products and our promotion of Samsung's NAND products. Earnings per diluted share was $0.00 for the quarter ended September 30, 2010, as compared to $0.03 in the same period last year.

Gross profit for the quarter ended September 30, 2010 was $950,000, down 60.6% from $2.4 million for the quarter ended September 30, 2009, primarily due to lower margins resulting from the factors mentioned above. Gross margin for the quarter ended September 30, 2010 was 0.9%, down from 3.2% as compared to the quarter ended September 30, 2009. The decrease in gross profit and gross margin was mainly due to the decrease in the average selling prices of our products as the market became saturated with excess supply.

Mr. Yang continued, “During the quarter we continued to pursue initiatives to improve our internal financial performance and minimize unnecessary costs. We recorded an 11.2% decrease in operating expenses as compared to the corresponding quarter in 2009. We expect our sales turnover to remain stable in the fourth quarter of 2010. We also expect global market demand and the average selling prices of our products to remain stable in the fourth quarter 2010. We are confident in our outlook as the electronics sector is expected to grow for the remainder of the year and we are well-positioned to take advantage of the foreseeable growth in China's market.”

{complink 12846|ACL Semiconductors Inc.}

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