Global Politics, US, VR World

MediaTek Sees Profit Rise 6% in Q3, But Misses Expectations

MediaTek (TPE: 2454) announced late Thursday that it had posted a 6% rise in profits quarter-over-quarter, earning $435 million in the third quarter of 2014.

The chip designer’s revenue for the period rose by 6.2% to $1.8 billion. Wall Street had expected slightly more, and the revenue growth comes in at the low end of the guidance issued by MediaTek last month. The company said that it was expecting growth between 5-13%.  The company also reported that its profit margin fell 0.5% from a quarter prior to 49.1%.

MediaTek’s CFO Ta Wei Ku said during an earnings conference call that MediaTek missed expectations because of a faster than expected transition to 4G from 3G.

“I think for the third quarter numbers, in general, the smartphones are maybe a little bit softer than – relatively speaking, while we’re giving out the guidance, 5% to 13%,” he said during the call. “I guess most likely, it’s because the 3G and 4G transition actually happened actually pretty strong in the third quarter. And for 4G products, currently for third quarter, the major product we have is still dual-chip solution.”

MediaTek executives said that they expect the company’s profit margin and earnings to dip in the next quarter as it spends more money on research and development in order to better compete in the baseband market.