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Shares of Chunghwa Picture Tubes down on HP's price fixing charge
Central News Agency
2012-12-05 12:21 PM
Taipei, Dec. 5 (CNA) Shares of flat panel maker Chunghwa Picture Tubes Ltd. continued trending lower Wednesday morning after Hewlett-Packard filed a lawsuit, alleging the Taiwanese firm and others manipulated screen prices, dealers said. Investors feared that the U.S.-based personal computer vendor is seeking large damages from Chunghwa Picture, which will deal a serious blow to the loss-incurring flat panel maker, they said. As of 11:33 a.m. shares of Chunghwa Picture Tubes had lost 2.22 percent to NT$0.88 (US$0.03) with 7.08 million shares changing hands. The benchmark weighted index was up 0.60 percent at 7,646.60 points. "The stock was affected by the news of HP's legal action yesterday. Its losses extended this morning, indicating investors' fears over massive damages sought by HP," Grand Cathay Securities analyst Jeff Chang said. According to a Bloomberg report, HP filed a lawsuit to a federal court in San Francisco in late November, alleging Chunghwa Picture Tubes and Tatung Co. of America Inc. joined other companies to fix product prices during the period of 1998-2006. Tatung Co. is the parent of Chunghwa Picture Tubes. The report said due to the conspiracy, HP has suffered more than US$1 billion (NT$29.1 billion) in financial losses, and is seeking treble damages. "While the damages will have to be decided by the court, the lawsuit has prompted many investors to cut their holdings in Chunghwa Picture Tube shares for the moment," Chang said. "The financial damages are expected to further squeeze Chunghwa Picture Tubes' bottom line," Chang said. In the first nine months of this year, the flat panel maker incurred NT$1.50 in loss per share, extending from NT$1.33 in loss per share recorded over the same period of last year. Chang said Chunghwa Picture Tubes is faced with fierce competition in the global market even though it has shifted to small- and medium-sized screen production from large-sized panel manufacturing. "Although demand for small- and medium-sized panels is on the rise on the back of popularity of mobile communications devices, Chunghwa Picture Tubes has failed to win orders from major vendors, such as Apple Inc. and Samsung Electronics Co.," Chang said. "Due to its lagging production technology, I expect Chunghwa Picture Tubes will continue to incur losses in the fourth quarter of this year," Chang said. "Its loss per share is likely to stand at NT$2 for 2012." Chang said Chunghwa Picture Tubes shares may stage a technical rebound after the current heavy losses caused by the HP lawsuit, but investors should keep alert, while trading the stock. "There are still concerns over its fundamentals," Chang said. (By Frances Huang)
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