Japan's Advantest flags much deeper loss on weak smartphone demand

TOKYO Tue Jan 28, 2014 4:30am EST

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TOKYO Jan 28 (Reuters) - Japan's Advantest Corp, the world's largest maker of chip testing equipment, has widened its full-year net loss forecast by 14 times because of weak demand for testers of chips used in smartphones.

Advantest, which competes with U.S.-based Teradyne Inc , in September said it would post its third consecutive loss rather than a profit as first envisaged, though it saw demand for testing equipment picking up somewhat toward year-end.

But the company widened its loss forecast on Tuesday a day after smartphone maker Apple Inc said it sold fewer new iPhones than expected over the year-end holiday period, and projected January-March revenue below analyst estimates.

Advantest now sees a net loss of 35.9 billion yen ($350.47 million) for the business year ending March instead of the September forecast loss of 2.5 billion yen. Its initial forecast was a profit of 9.8 billion yen.

The result would compare with the median 9.1 billion yen loss estimate of 17 analysts polled by Thomson Reuters I/B/E/S. Last year, Advantest reported a loss of 3.82 billion yen.

"We've been hearing that the company has been struggling, but analysts have kept their guidance so the news should be a negative surprise to the stock," said a fund manager at a European asset management firm who asked not to be identified.

In recent weeks, traders have been indicating expectations of a decline in the price of Advantest stock by increasingly selling borrowed shares rather than bought shares. Borrowers must buy back the shares at a later date, and stand to profit if the buyback price is lower than the selling price.

As of Jan. 24, 12.66 percent of Advantest shares were out on loan compared with 11 percent on Dec. 30, the last trading day of 2013, according to data provider Markit.

On Tuesday, Advantest said it expected to book a full-year operating loss of 36 billion yen instead of breaking even as forecast in September. It originally forecast a profit of 13 billion yen.

The company also halved its year-end dividend forecast to 5 yen, bringing full-year dividend to 15 yen. ($1 = 102.4350 Japanese Yen) (Reporting by Chang-Ran Kim, Ayai Tomisawa and Dominic Lau; Editing by Christopher Cushing)

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