Chartered expects larger loss in Q3

SAN JOSE, Calif. — In its scheduled mid-quarter update, Singapore’s Chartered Semiconductor Manufacturing Pte. Ltd. slightly raised its sales guidance for Q3, but the foundry provider also expects a larger loss for the period.

"Revenues at the Chartered level and revenues including our share of Silicon Manufacturing Partners (SMP or Fab 5) are now expected to be approximately at the mid to high end of our prior guidance. Consistent with higher revenues, our third-quarter net loss, excluding the impact of recently concluded financing arrangements, is expected to be approximately at the mid to low end of the range guided previously," said George Thomas, senior vice president and CFO of Singaporean foundry provider, in a statement Chartered.

Singaporean foundry Chartered last month completed a private placement of $300 million worth of “units” with the trading division of Goldman Sachs (Singapore) Pte. Chartered is using the net proceeds to repay some of its current debt with the remainder to be used for other working capital and general corporate purposes (see August 17 story).

"The impact of recent financing arrangements mainly includes two items: a non-recurring, non-cash expense of approximately $8 million related to the cash tender offer for $477.8 million of the original principal amount of the $575 million 2.5 percent senior convertible notes due 2006 and a higher net interest expense of approximately $5 million due to increased debt level from the $625 million senior notes offering concluded in early August 2005. Accordingly, we now expect an increase of approximately $13 million in interest expense for the quarter. This is also expected to increase the current quarter loss guidance mentioned above by the same amount," he said.

Chartered reported revenues of $194.0 million in the second quarter, up 7.0 percent sequentially and down 24.2 percent from the like period a year ago. It posted a loss of $67.1 million in the quarter, compared to a net loss of $84.5 million in the previous quarter and net profit of $15.3 million in 2Q 2004.

Capacity utilization in second quarter was 65 percent, compared to 90 percent in the year-ago quarter, and 59 percent in first quarter 2005.

For Q3, Chartered recently said it is expected to report a loss of $47 million, plus or minus $5 million, over Q2. Sales are projected to hit $283 million, plus or minus $4 million. Utilization is projected to hit 70 percent, plus or minus 2 percent (see June 21 2001 story).

SMP’s sales are projected to hit $307 million in Q3, plus or minus 5 percent, up 37-to-42 percent from Q2.