奇景光電 (HIMX) 2008 Q3 法說會逐字稿

Greetings and welcome to the Himax Technologies Inc. Third Quarter Earnings 2008 Conference Call. (Operator Instructions). As a reminder, this conference is being recorded.

您好，歡迎參加 Himax Technologies Inc. 2008 年第三季度收益電話會議。 （操作員說明）。提醒一下，本次會議正在錄製中。

It is now my pleasure to introduce your host, Mr. Joseph Villalta of The Ruth Group. Thank you, Mr. Villalta, you may begin.

現在很高興向您介紹主持人，露絲集團的 Joseph Villalta 先生。謝謝你，Villalta 先生，你可以開始了。

Welcome everyone to Himax's third quarter 2008 earnings call. Joining us from the Company are Mr. Jordan Wu, President and Chief Executive Officer, and Mr. Max Chan, Chief Financial Officer. After the Company's prepared comments we will then have time for any questions.

歡迎大家參加奇景光電2008年第三季度財報電話會議。從公司加入我們的有總裁兼首席執行官Jordan Wu 先生和首席財務官Max Chan 先生。在公司準備好評論後，我們將有時間提出任何問題。

If you have not yet received a copy of today's results Release, please call The Ruth Group at 646 536-7026. Or you can get a copy off of Himax's website at www.himax.com.tw.

如果您尚未收到今天發布的結果副本，請致電 646 536-7026 聯繫 The Ruth Group。或者，您可以從 Himax 的網站 www.himax.com.tw 獲得一份副本。

Before we begin the formal remarks, I'd like to remind everyone that some of the statements in this conference call, including statements regarding expected future financial results and industry growth, are forward-looking statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this conference call.

在我們開始正式發言之前，我想提醒大家，本次電話會議中的一些陳述，包括有關預期未來財務業績和行業增長的陳述，是前瞻性陳述，涉及許多風險和不確定性，可能導致實際事件或結果與本次電話會議中描述的事件或結果存在重大差異。

Factors that could cause actual results to differ include, but not limited to, general business and economic conditions and the state of the semiconductor industry, the level of competition, demand for end-user application products, reliance on a small group of principal customers, the uncertainty of continued success in technological innovations, our ability to develop and protect our intellectual property, pricing pressures including declines in average selling prices, changes in customer order patters, shortages in supply of key components, changes in environmental laws and regulations, exchange rate fluctuations, regulatory approvals for further investments in our subsidiaries, and other risks described from time to time in the Company's SEC filings, including those risks identified in the section entitled Risk Factors in its Form 20-F for the year ended December 31st, 2007 filed with the SEC dated June 20th, 2008 as amended.

可能導致實際結果不同的因素包括但不限於一般商業和經濟狀況以及半導體行業的狀況、競爭水平、對最終用戶應用產品的需求、對一小部分主要客戶的依賴、技術創新持續成功的不確定性、我們開發和保護知識產權的能力、定價壓力，包括平均售價下降、客戶訂單模式的變化、關鍵部件供應短缺、環境法律法規的變化、匯率波動、對我們子公司進一步投資的監管批准，以及公司向美國證券交易委員會提交的文件中不時描述的其他風險，包括在其截至 2007 年 12 月 31 日提交的年度 20-F 表格中標題為風險因素的部分中確定的風險SEC 於 2008 年 6 月 20 日修訂。

The financial information included in this conference call is unaudited and consolidated and prepared in accordance with the US GAAP. Such financial information is generated internally and has not been subjected to the same review and scrutiny, including internal auditing procedures and audit by independent auditors, to which we subject our audited consolidated financial statements, and may vary materially from the audited consolidated financial information for the same period.

本次電話會議中包含的財務信息未經審計，並根據美國公認會計原則進行合併和準備。此類財務信息是內部產生的，並未接受相同的審查和審查，包括我們對經審計的綜合財務報表進行審計的內部審計程序和獨立審計師的審計，並且可能與本年度的經審計綜合財務信息存在重大差異同一時期。

Any evaluation of the financial information included in this conference call should also take into account our published audited consolidated financial statements and the notes to those statements. In addition, the financial information included in this conference call is not necessarily indicative of our results for any future period. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

對本次電話會議中包含的財務信息的任何評估還應考慮我們發布的經審計的綜合財務報表和這些報表的註釋。此外，本次電話會議中包含的財務信息不一定代表我們未來任何時期的業績。公司不承擔因新信息、未來事件或其他原因而公開更新或修改任何前瞻性陳述的義務。

At this time I would now like to turn the call over to Mr. Jordan Wu.

現在我想把電話轉給Jordan Wu先生。

Thank you, Joseph, and thank you everyone for joining us today's call. Before we discuss our third quarter results in detail and provide fourth quarter guidance, I would like to briefly recap several statements we have made over the past couple of months regarding our third quarter guidance.

謝謝約瑟夫，也感謝大家加入我們今天的電話會議。在我們詳細討論第三季度業績並提供第四季度指導之前，我想簡要回顧一下我們在過去幾個月中就第三季度指導所做的幾項聲明。

As you know, the global financial market turmoil and the slowing of consumer spending have added a number of complexities and uncertainties to our business, which has made it difficult to provide guidance. We initially provided our third quarter guidance in early August, during a period when our customers were ratcheting down their third quarter forecasts. Subsequently, in early September, we raised our third quarter guidance to reflect our more definitive near-term views. On October 6, we pre-announced our third quarter revenues, which were in the mid range of our raised guidance and re-affirmed our raised gross margin and EPS guidance.

如您所知，全球金融市場動盪和消費支出放緩給我們的業務增加了許多複雜性和不確定性，導致難以提供指導。我們最初在 8 月初提供了第三季度的指導，當時我們的客戶正在下調他們的第三季度預測。隨後，在 9 月初，我們上調了第三季度指引，以反映我們更明確的近期觀點。 10 月 6 日，我們預先宣布了我們的第三季度收入，該收入處於我們上調指引的中間範圍，並重申了我們上調的毛利率和每股收益指引。

While a quarter has past since our previous conference call, predicting our financial results with high accuracy remains tough, if not tougher, in today's business environment.

雖然自上次電話會議以來已經過去了一個季度，但在當今的商業環境中，以高精度預測我們的財務結果仍然很困難，如果不是更難的話。

Now, to our third quarter 2008 financial results, I will start with brief highlights of Himax's overall performance during the third quarter and discuss our outlook for the fourth quarter. Max Chan, our CFO, will then provide further details on our financial performance.

現在，對於我們 2008 年第三季度的財務業績，我將首先簡要介紹 Himax 在第三季度的整體表現，並討論我們對第四季度的展望。然後，我們的首席財務官 Max Chan 將提供有關我們財務業績的更多詳細信息。

Our third quarter revenues were $230.1 million, representing a 5.5% decline year-over-year and 6.8% decline sequentially.

我們第三季度的收入為 2.301 億美元，同比下降 5.5%，環比下降 6.8%。

Revenues from large panel display drivers were down 17.4% from the same period last year and down 18.0% sequentially, accounting for 72.4% of our total revenues in the third quarter. During the quarter, most of our large panel customers lowered their fab utilizations. The resulting weaker demand for driver ICs, coupled with declining ASP, negatively impacted our revenues.

大型面板顯示驅動器收入同比下降17.4%，環比下降18.0%，佔第三季度總收入的72.4%。在本季度，我們的大多數大型面板客戶都降低了他們的晶圓廠利用率。由此導致的驅動IC需求疲軟，加上平均售價下降，對我們的收入產生了負面影響。

Despite the downturn in our large panel display drivers, the third quarter of 2008 was a remarkable quarter for our small and medium-sized driver business. We recorded record revenues of $48.3 million, up 39.5% year-over-year and up 58.2% sequentially. Percentage of total revenues also achieved a record high at 21%, compared to 12.4% last quarter. Among various small and medium-sized applications, demand for our handset display drivers was particularly strong in the third quarter with revenue doubling sequentially. On top of that, during the third quarter we became Taiwan's largest display driver vendor for small and medium-sized TFT-LCD applications.

儘管我們的大面板顯示驅動器出現低迷，但對於我們的中小型驅動器業務而言，2008 年第三季度是一個非凡的季度。我們錄得創紀錄的 4830 萬美元收入，同比增長 39.5%，環比增長 58.2%。佔總收入的百分比也達到創紀錄的 21%，而上一季度為 12.4%。在各種中小型應用中，對我們的手機顯示驅動器的需求在第三季度尤為強勁，收入環比翻番。最重要的是，在第三季度，我們成為台灣最大的中小型TFT-LCD應用顯示驅動器供應商。

As with our small and medium-sized driver business, our non-driver business also achieved record highs in both revenues and percentage of total revenues in the third quarter of 2008. Revenues from non-driver business were $15.1 million in the third quarter, up 114.4% year-over-year and up 14.4% sequentially, accounting for 6.6% of our total revenues.

與我們的中小型司機業務一樣，我們的非司機業務在 2008 年第三季度的收入和占總收入的百分比也創下歷史新高。第三季度非司機業務收入為 1510 萬美元，同比增長同比增長 114.4%，環比增長 14.4%，占我們總收入的 6.6%。

Gross margin was 24.5% in the third quarter of 2008, up 2 percentage points year-over-year, but down 1 percentage point sequentially. Gross margin came in at the high end of our guidance. The sequential decline in gross margin was primarily due to the price pressure we faced from our customers, especially those in the large panel segments. Nevertheless, the pressure was partially offset by our cost reduction efforts we made, such as improving designs and processes, diversifying product offerings, and leveraging our economies of scale.

2008年第三季度毛利率為24.5%，同比上升2個百分點，但環比下降1個百分點。毛利率處於我們指導的高端。毛利率的連續下降主要是由於我們面臨來自客戶的價格壓力，尤其是大型面板領域的客戶。儘管如此，我們所做的降低成本的努力部分抵消了壓力，例如改進設計和流程、多樣化的產品供應以及利用我們的規模經濟。

Our third quarter GAAP EPS was $0.09, down from $0.11 the same period last year and down from $0.20 in the second quarter of 2008. Similar to our gross margin, our GAAP EPS also came in at the high end of our guidance. The sequential decline in our GAAP EPS was primarily due to the reduced revenues and our annual restricted share units award granted to employees at the end of September. Max will provide further details later.

我們第三季度的 GAAP 每股收益為 0.09 美元，低於去年同期的 0.11 美元和 2008 年第二季度的 0.20 美元。與我們的毛利率類似，我們的 GAAP 每股收益也處於我們指導的高端。我們 GAAP 每股收益的連續下降主要是由於收入減少以及我們在 9 月底授予員工的年度限制性股票單位獎勵。 Max稍後會提供更多細節。

In the third quarter, we saw a significant shift in our revenue mix. While revenues from large panel applications declined, due primarily to customers' reducing fab utilization and lasting price pressure, we achieved record revenues in our small and medium-sized applications and non-driver businesses.

在第三季度，我們的收入組合發生了重大變化。雖然大型面板應用的收入下降，主要是由於客戶降低晶圓廠利用率和持續的價格壓力，但我們在中小型應用和非驅動器業務中實現了創紀錄的收入。

During the third quarter there was a strong demand for our handset display drivers from both the Chinese market and the worldwide brands. We continue to make great progress penetrating the market of the world's top tier cell phone developers. Many of the recently launched, well-known, high-end cell phones have Himax display drivers inside.

在第三季度，中國市場和全球品牌對我們的手機顯示驅動器的需求強勁。我們繼續在滲透世界頂級手機開發商市場方面取得巨大進展。許多最近推出的知名高端手機都內置了 Himax 顯示驅動程序。

Over the past few months, over a dozen companies launched or showcased their pico-projector products in accessory, embedded, and standalone formats based on our LCOS solutions. One of those products won the Gold Award in the Portable Electronics Category for Outstanding Innovation and Technology Products at the recent 2008 Hong Kong Electronics Fair.

在過去的幾個月裡，十多家公司推出或展示了基於我們的 LCOS 解決方案的附件、嵌入式和獨立格式的微型投影儀產品。其中一款產品在最近舉行的 2008 年香港電子展上榮獲便攜式電子產品類別的傑出創新及科技產品金獎。

Another notable example for our recent progress in LCOS product line is our recent alliance with Wingtech, one of China's largest cell phone solution providers. China is one of the fastest growing markets for consumer electronics and remains one of the few markets in the world where consumer spending remains relatively robust. The China white brand handset segment is well known for its aggressive pursuit of new features and fast time-to-market. We expect the China white brand handset market to be one of the early adopters of our LCOS technology.

我們最近在 LCOS 產品線方面取得進展的另一個值得注意的例子是我們最近與中國最大的手機解決方案提供商之一聞泰科技結盟。中國是消費電子產品增長最快的市場之一，並且仍然是世界上為數不多的消費支出保持相對強勁的市場之一。中國白牌手機市場以積極追求新功能和快速上市而聞名。我們預計中國白牌手機市場將成為我們 LCOS 技術的早期採用者之一。

During the third quarter, we commenced volume shipments of our TV controller. Commercial production of our monitor scaler is also taking place in the fourth quarter. Since we formed the strategic partnership with TPV, the world's largest TFT-LCD monitor manufacturer and one of the major TV ODMs, in the beginning of 2008, our TV controller and monitor scaler have rapidly gone through various qualification and testing procedures and entered into volume production. The system know-how we accumulated from the unique working model with both TPV, the set manufacturer and CMO, the panel maker, have paved the way for broader adoption of our products in the quarters to come. We expect to launch our next generation ICs in this segment in the first half of 2009.

在第三季度，我們開始批量出貨我們的電視控制器。我們的監視器縮放器的商業生產也在第四季度進行。自2008年初我們與全球最大的TFT-LCD顯示器製造商和主要電視ODM廠商之一冠捷科技建立戰略合作夥伴關係以來，我們的電視控制器和顯示器縮放器迅速通過各種認證和測試程序並進入量產生產。我們從與設備製造商 TPV 和麵板製造商 CMO 的獨特合作模式中積累的系統專業知識，為未來幾個季度更廣泛地採用我們的產品鋪平了道路。我們預計將在 2009 年上半年在該領域推出我們的下一代 IC。

Backed by our strong balance sheet, we remain fully committed to our long-term goal of being the world's leading semiconductor solution provider in the flat panel display industry. We have become a world leader in the display driver market, which is a major step forward-- which is a major step toward achieving our goal. TV and monitor controller and LCOS pico projector product lines will continue to be essential areas for us to broaden our product portfolio. Following years of R&D, we have not only commenced commercial production in both areas, we believe our product offerings are competitive and we are strongly positioned in those markets. We anticipate that both product lines will bring increasingly positive contributions to our top and bottom lines for next year.

在我們強大的資產負債表的支持下，我們將繼續全力實現我們成為平板顯示行業全球領先的半導體解決方案供應商的長期目標。我們已經成為顯示驅動器市場的世界領先者，這是向前邁出的一大步——這是朝著實現我們的目標邁出的一大步。電視和監視器控制器以及 LCOS pico 投影儀產品線將繼續成為我們擴大產品組合的重要領域。經過多年的研發，我們不僅在這兩個領域開始了商業生產，我們相信我們的產品具有競爭力，並且我們在這些市場中處於強勢地位。我們預計這兩條產品線將為我們明年的營收和利潤帶來越來越積極的貢獻。

Looking ahead, we anticipate another challenging quarter resulting from the tightening credit and consumer spending weakness in the global economy. Literally all of our customers have announced plans to further reduce capacity utilization in the fourth quarter. This, naturally, has negatively impacted our near-term revenue and profit outlook.

展望未來，我們預計由於全球經濟信貸收緊和消費者支出疲軟，將迎來又一個充滿挑戰的季度。從字面上看，我們所有的客戶都宣布了在第四季度進一步降低產能利用率的計劃。這自然對我們的近期收入和利潤前景產生了負面影響。

Amid the unprecedented, sudden industry downturn, we are taking measures to further rationalize our operations and control our costs and expenses. Concrete measures have been and will continue to be taken to control both non-headcount and headcount related expenses.

在前所未有的、突然的行業低迷中，我們正在採取措施進一步合理化我們的運營並控制我們的成本和開支。已經並將繼續採取具體措施來控制非人員費用和人員相關費用。

Moving to our fourth quarter guidance, we expect fourth quarter revenues to decline by 23 to 28% sequentially, gross margin to decline by 2 to 3 percentage points, and GAAP EPS to be in the range of $0.06 to $0.08. Given the limited visibility we are facing, our actual fourth quarter results could depart from what we state today, with both upside and downside risks.

轉向我們的第四季度指導，我們預計第四季度收入將環比下降 23% 至 28%，毛利率下降 2 至 3 個百分點，GAAP 每股收益將在 0.06 美元至 0.08 美元之間。鑑於我們面臨的能見度有限，我們第四季度的實際業績可能與我們今天所說的有所不同，既有上行風險也有下行風險。

Now let me turn over to Max Chan, our CFO, for further details on our quarterly financials.

現在讓我向我們的首席財務官 Max Chan 詢問有關我們季度財務的更多詳細信息。

Thank you, Jordan. As Jordan mentioned, we are encouraged to see our product diversification strategy bearing fruit. Revenues from large panel application, small and medium-sized panel applications and non-driver business accounted for 72.4%, 21.0% and 6.6% of our total revenues, respectively. Small and medium-sized panel drivers and non-driver both achieved record revenues in the third quarter, partially mitigating the revenue decline in large panel applications.

謝謝你，喬丹。正如喬丹所說，我們很高興看到我們的產品多元化戰略取得成果。大面板應用、中小尺寸面板應用和非驅動業務的收入分別占我們總收入的72.4%、21.0%和6.6%。中小型面板驅動器和非驅動器在第三季度均實現了創紀錄的收入，部分緩解了大型面板應用的收入下降。

At the end of September, we granted our annual restricted awards to employees, valued at $23.8 million, a decrease of 9.8%, as compared to the $26.4 million granted in 2007. The 2008 restricted awards consisted of Restricted Share Units, or RSUs, of $20.9 million and restricted cash award of $2.9 million. Of the $20.9 million RSUs, $12.7 million was vested and expensed immediately on the grant day and paid in cash. The remainder will be paid in three equal installments of stocks over the next three years. The maximum share dilution resulting from the 2008 RSU award is around 1.5% of our total shares outstanding. The restricted cash award of $2.9 million will be paid in three equal installments of cash over the next three years.

截至 9 月底，我們向員工授予了價值 2,380 萬美元的年度限制性獎勵，與 2007 年授予的 2,640 萬美元相比下降了 9.8%。2008 年的限制性獎勵包括限制性股票單位或 RSU， 2090 萬美元和 290 萬美元的限制性現金獎勵。在 2090 萬美元的 RSU 中，1270 萬美元在授予日立即歸屬和支出，並以現金支付。其餘部分將在未來三年內分三期等額支付。 2008 年 RSU 獎勵導致的最大股份稀釋約為我們已發行股份總數的 1.5%。 290 萬美元的限制性現金獎勵將在未來三年內分三期等額支付。

In the third quarter, share-based compensation was $14.4 million and acquisition-related charges were $0.4 million.

第三季度，基於股票的薪酬為 1440 萬美元，與收購相關的費用為 40 萬美元。

Excluding share-based compensation and acquisition-related charges, our non-GAAP gross margin was 24.6%, up from 22.6% a year ago and down from 25.6% a quarter ago. Non-GAAP operating income was $30.6 million, down from $36.2 million in the same period last year and down from $37.8 million in the previous quarter. Non-GAAP net income was $32.5 million, down from $37.4 million in the same period last year, and down from $39.8 million in the previous quarter. Non-GAAP EPS was $0.17, down from $0.19 in the same period last year and down from $0.21 in the previous quarter.

不計股權薪酬和收購相關費用，我們的非美國通用會計準則毛利率為 24.6%，高於一年前的 22.6%，低於上一季度的 25.6%。非美國通用會計準則營業收入為 3060 萬美元，低於去年同期的 3620 萬美元，低於上一季度的 3780 萬美元。非美國通用會計準則淨收入為 3250 萬美元，低於去年同期的 3740 萬美元，低於上一季度的 3980 萬美元。非美國通用會計準則每股收益為 0.17 美元，低於去年同期的 0.19 美元和上一季度的 0.21 美元。

We recognized a net foreign currency exchange loss in earnings of about $1.1 million in the third quarter, primarily due to the recent NT dollar depreciation. Virtually all of our sales and costs of goods sold are priced in US dollars and the majority of our cash is in US dollars as well. However, we do maintain a small portion of our net in NT dollars for local working capital purposes.

我們在第三季度的收益中確認了約 110 萬美元的淨外匯匯兌損失，主要是由於近期新台幣貶值所致。幾乎我們所有的銷售和所售商品的成本都以美元計價，我們的大部分現金也以美元計價。但是，我們確實將一小部分淨額以新台幣作為當地營運資金用途。

In addition, there are tax-related assets and liabilities on our balance sheet, which are naturally NT dollar denominated. The net foreign currency exchange loss in the third quarter was primarily the results of the conversion of NT dollar denominated deferred income tax assets into US dollars, which is our functional and reporting currency; such gain or loss is not a cash item. We continue to seek a neutral position on a US dollar basis, regardless of the NT dollar movement, to reduce the foreign currency exchange impacts.

此外，我們的資產負債表上還有與稅收有關的資產和負債，這些資產和負債自然是以新台幣計價的。第三季度的淨匯兌損失主要是由於將新台幣計價的遞延所得稅資產轉換為我們的功能和報告貨幣美元的結果；此類收益或損失不是現金項目。無論新台幣走勢如何，我們繼續尋求以美元為基礎的中立頭寸，以減少外匯兌換的影響。

As Jordan mentioned earlier, we are adopting measures to further improve our operational efficiency and control our costs and expenses to cope with the challenging environment. Excluding share-based compensation and amortization-related charges, the growth rate of our non-GAAP operating expenses has been declining quarter-over-quarter since the first quarter of 2008.

正如佐敦早前提到的，我們正在採取措施進一步提高我們的運營效率並控制我們的成本和開支，以應對充滿挑戰的環境。不計股權報酬和攤銷相關費用，我們的非公認會計原則運營費用的增長率自 2008 年第一季度以來一直在環比下降。

We generated a net operating cash flow of $34.2 million in the third quarter. Capital expenditure for the third quarter was $2.8 million, as compared to $3.0 million in the second quarter. This includes primarily expenditure relating to the purchase of R&D related equipment and the relocation of our Taipei office.

我們在第三季度產生了 3420 萬美元的淨經營現金流。第三季度的資本支出為 280 萬美元，而第二季度為 300 萬美元。這主要包括與購買研發相關設備和搬遷台北辦事處有關的支出。

Upon reviewing our 2008 performance, a net tax benefit of $1.7 million was recognized in the third quarter to reflect a change in estimates of our taxable income and effective tax rate for the whole year of 2008.

回顧我們 2008 年的業績後，第三季度確認了 170 萬美元的淨稅收收益，以反映我們對 2008 年全年應稅收入和有效稅率的估計的變化。

With no debts, our balance sheet remains strong. Cash, cash equivalents, and marketable securities available for sale were $132.1 million at the end of September, an increase of $31.1 million from a quarter ago.

沒有債務，我們的資產負債表依然強勁。截至 9 月底，可供出售的現金、現金等價物和有價證券為 1.321 億美元，比上一季度增加了 3110 萬美元。

The fourth quarter 2008 guidance that Jordan provided earlier is based on 194 million diluted weighted average shares.

喬丹早些時候提供的 2008 年第四季度指引基於 1.94 億股稀釋加權平均股數。

Operator that concluded our prepared remarks. We can now take any questions.

結束我們準備好的評論的操作員。我們現在可以回答任何問題。

(Operator Instructions) Our first question is from the line of Gary Mobley with Piper Jaffray.

（操作員說明）我們的第一個問題來自 Gary Mobley 和 Piper Jaffray。

What was the personnel count at the end of the quarter and, relating to OpEx controls, could you talk about where the headcount might go and what some of the other lever points might be in terms of reigning in the operating expenses in light of where revenues are going?

本季度末的人員數量是多少，以及與運營支出控制有關，您能否談談員工人數可能會去哪里以及根據收入來源控制運營費用方面的其他一些槓桿點要去？

At the end of September we have about slightly over 1,200 headcount on a consolidated basis, including headcounts on all the majority owned subsidiaries of Himax, and we are conducting measures to review the headcount as well as the R&D projects and we are about to adopt measures to control on the headcount expenses as well as headcount related expenses.

截至 9 月底，我們的合併員工人數約為 1,200 多人，包括 Himax 所有控股子公司的員工人數，我們正在採取措施審查員工人數以及研發項目，我們即將採取措施控制人員費用以及人員相關費用。

More specifically at this moment I think in this current quarter we reduced our headcount, net headcount, by about 100.

更具體地說，此時此刻，我認為在本季度我們將員工人數（淨員工人數）減少了約 100 人。

Okay and would you expect seasonality to be normal in the first quarter? I know that seems like 10 years from now but any color there would be helpful.

好的，您是否希望第一季度的季節性正常？我知道這似乎是 10 年後的事，但那裡的任何顏色都會有幫助。

I think if you look at the previous two years our first quarter was always roughly 15% down sequentially from Q4 last year but this year is slightly different and I am sure you all appreciate it is much tougher to predict. If you-- if we talk to customers, they all say actually throughout the whole supply chain, including our distribution channels, in the TV segment in particular the inventory level is actually extraordinarily low.

我認為，如果你看看前兩年，我們的第一季度總是比去年第四季度下降約 15%，但今年略有不同，我相信你們都明白預測起來要困難得多。如果您-如果我們與客戶交談，他們都說實際上在整個供應鏈中，包括我們的分銷渠道，尤其是在電視領域，庫存水平實際上非常低。

However, the problem now, as we all know, is the lack of demand, so it's a bit hard to say. The inventory is indeed very, very low to as low as you can get, so some people are speculating that demand may not be as bad as most people think but then it's the matter of demand issue, which I think is probably everybody's guess but I will say monitor remains more sluggish compared to TV.

但是，眾所周知，現在的問題是需求不足，所以有點難說。庫存確實非常非常低到最低限度，所以有些人猜測需求可能沒有大多數人想像的那麼糟糕，但這是需求問題，我認為這可能是每個人的猜測，但我會說顯示器與電視相比仍然更遲鈍。

And relating to the fourth quarter revenue guidance, could you share with us what percent of the revenue decline is a function of unit declines versus ASP declines?

關於第四季度收入指導，您能否與我們分享收入下降的百分比是單位下降與 ASP 下降的函數？

The ASP decline, if you compare that with Q3, I think it's stabilizing, meaning the pressure is not as high as we have gone through in the previous quarter. I think that is primarily because the whole industry has gone through I think a relatively severe pricing decline in the third quarter, given the downturn, given the commencement of the downturn, and now I think it's getting to a point where both our sales, our suppliers and even our customers are seeing that the pressure for further cost reduction is getting more and more limited.

平均售價下降，如果你與第三季度相比，我認為它正在企穩，這意味著壓力沒有我們在上一季度經歷的那麼大。我認為這主要是因為整個行業已經經歷了第三季度相對嚴重的價格下跌，考慮到經濟低迷，考慮到經濟低迷的開始，現在我認為我們的銷售額，我們的供應商甚至我們的客戶都看到進一步降低成本的壓力越來越有限。

Now it's, again, it's a matter of demand issue I think.

現在，我認為這又是一個需求問題。

Okay one last question for me, what is the days of inventory held by your largest customer Chi Mei? In other words what does Chi Mei carry in terms of LCD driver IC days of inventory?

好的最後一個問題，您最大的客戶奇美的庫存天數是多少？也就是說，奇美的LCD驅動IC庫存天數是多少？

We don't-- as a policy, we don't comment on our customers' activities but I think that we have said over and over again, if you are only talking about driver ICs I think that's easier to answer. It's literally nothing. It's a-- they, it's on just in time basis.

我們不——作為一項政策，我們不對客戶的活動發表評論，但我認為我們已經一遍又一遍地說過，如果你只談論驅動器 IC，我認為這更容易回答。從字面上看，什麼都不是。這是一個 - 他們，這是在及時的基礎上。

Frank Wang with Morgan Stanley.

摩根士丹利的 Frank Wang。

A couple of questions from me. First, on 2009 do you have an expectation for the [large] size on driver shipments in terms of the growth rate?

我有幾個問題。首先，您對2009年驅動器出貨量的增長速度有預期嗎？

It's too early to tell, Frank. I think people are fear. In general people are not really very upbeat about capacity utilization. I think this for the first quarter or two I would say they are pretty mixed opinions if I talk to my customers, you know, for say August industry situation, but I would say nobody is too upbeat about the first half. That's all I can say. And again, it's all a demand issue.

弗蘭克，現在說還為時過早。我認為人們是恐懼的。總的來說，人們對產能利用率並不是很樂觀。我認為這是第一季度或第二季度，如果我與我的客戶交談，你知道，比如 8 月份的行業情況，我會說他們的意見很複雜，但我想說沒有人對上半年過於樂觀。這就是我能說的。再說一遍，這都是需求問題。

Okay. I guess the question basically centers around it looks like in 2008 your shipment growth is actually lagging Chi Mei for large sized shipments and then you also talk about you haven't gained in market share. You're the largest driver IC maker and so in 2009 I think most projections you're expecting the large size panel to grow, so shall we start expecting growth for Himax in the driver IC for the large size in 2009?

好的。我猜這個問題基本上圍繞著它看起來在2008年你的出貨量增長實際上落後於奇美的大尺寸出貨量，然後你還說你沒有獲得市場份額。你們是最大的驅動IC製造商，所以在2009年我認為大多數預測你都預計大尺寸面板會增長，那麼我們是否應該開始期待Himax在2009年在大尺寸驅動IC方面的增長？

Well, again, I think the big wild card is customer's capacity utilization, but I think I would also like to comment that I believe our market share with Chi Mei as our customer didn't really or has not decreased. It stays about the same as the previous year and I think when you say the unit growth has declined compared with Chi Mei's volume growth, I think at the space probably a matter of customers adopting higher channel ICs.

好吧，再一次，我認為最大的不確定因素是客戶的產能利用率，但我想我也想評論一下，我相信我們與奇美的市場份額作為我們的客戶並沒有真正或沒有減少。它與去年大致相同，我認為當你說單位增長與奇美的銷量增長相比有所下降時，我認為在這個空間可能是客戶採用更高通道 IC 的問題。

Okay and then for the panel makers, it looks like they will be in losses on the-- as you mentioned and in the first half 2009, what should we be expecting your margin to drop on this downturn?

好的，然後對於面板製造商來說，看起來他們將在 - 正如你提到的那樣在 2009 年上半年虧損，我們應該期待你的利潤在這次低迷中下降嗎？

If you look at the history, indeed when the customers are having a difficult time in their P&L we tend to-- our gross margins tend to decline, certainly not as dramatic. The trend is not as dramatic as our customers will experience and, likewise, when they are doing well we tend to do better as well, but again not as dramatically. So I don't see any reason why we should expect anything different this time around.

如果您查看歷史，確實當客戶在損益表中遇到困難時，我們傾向於 - 我們的毛利率往往會下降，當然不會那麼劇烈。這種趨勢並不像我們的客戶所體驗到的那樣引人注目，同樣，當他們做得很好時，我們往往也會做得更好，但也沒有那麼引人注目。所以我看不出有什麼理由讓我們這次期待有什麼不同。

However, what I also want to add is that driver actually accounts for less and less a percentage of their total billed material, our customers, which is certainly good news and bad news. You know, the bad news is our market size, total size as a whole is not-- is perhaps not growing as fast as [allowed] for the panels. However, the pricing pressure on these [first] driver vendors strictly speaking is arguably less than before because customers are now focusing more on newer technology or innovation and you're quoting core [versatility] when it comes to urgent delivery and I think we are very good at those.

然而，我還想補充的是，司機實際上佔他們總賬單材料的百分比越來越少，我們的客戶，這當然是好消息和壞消息。你知道，壞消息是我們的市場規模，整體規模不是——也許沒有像面板的[允許]那樣快速增長。然而，嚴格來說，這些 [第一] 驅動程序供應商的定價壓力可以說比以前小了，因為客戶現在更多地關注更新的技術或創新，而當涉及到緊急交付時，您引用的是核心 [多功能]，我認為我們是非常擅長這些。

And, so I guess the question I have, as you seem to include your margin into this up cycle and so sorry it's back in maybe the margin is downturn on the magnitude of falling maybe similar to the past cycle, but on the absolute basis you'd be better than our last downturn?

而且，所以我想我有一個問題，因為你似乎將你的利潤包括在這個上升週期中，所以很抱歉它又回來了會比我們上次的經濟衰退更好嗎？

Sorry, I didn't get your point.

對不起，我沒有明白你的意思。

In laymen's terms is that last time your margin troughed in 17.4%, but in this up cycle your margin has also improved to about 25.5% which is higher than the last up cycle, so the question is that if your margin were to fall going into first half 2009, so are you expecting the absolute level should be higher then the level we saw before, maybe they say 20% or something?

通俗地說，上一次你的保證金跌至 17.4% 的低谷，但在這個上升週期中，你的保證金也提高到了 25.5% 左右，高於上一個上升週期，所以問題是如果你的保證金下降到2009 年上半年，那麼您是否期望絕對水平應該高於我們之前看到的水平，也許他們說 20% 或什麼？

Again, it's hard to tell. I think we are, as a general comment, I think across the whole panel industry I think, again, the big wild card is capacity utilization and even when we are sort of already towards the middle of the quarter already in Q4, you know I would have to admit the visibility is still not very, very high, certainly much lower than usual because customers are sort of they again is at the main issue and customers sometimes have to take very sort of quick orders and they have to just check whether it is a good deal from their P&L's perspective and to decipher that as you take a feel.

再說一次，很難說。我認為，作為一般性評論，我認為在整個面板行業中，最大的不確定因素是產能利用率，即使我們在第四季度已經接近季度中期，你知道我不得不承認知名度仍然不是很高，肯定比平時低很多，因為客戶有點他們再次成為主要問題，客戶有時必須接受非常快速的訂單，他們只需要檢查它是否從他們的損益表的角度來看，這是一個很好的交易，並在您感覺時破譯它。

Once they-- the answer is yes, they rush to guys like us and demand a quick delivery of the ICs, so in this situation I think the visibility for everybody across the supply chain is relatively low. And, again, I mentioned earlier that notwithstanding all this varies sort of situations. The only good news is that the channel, the in channel inventory remains very low, much lower than usual and that also explains why people are giving and receiving very short sort of short orders. So, again, it's a very, very difficult question to make a prediction upon at the moment.

一旦他們 - 答案是肯定的，他們就會沖向像我們這樣的人並要求快速交付 IC，所以在這種情況下，我認為整個供應鏈中每個人的能見度都相對較低。而且，我之前再次提到，儘管有這一切，但情況會有所不同。唯一的好消息是渠道，渠道內的庫存仍然非常低，比平時低得多，這也解釋了為什麼人們發出和接收非常短的短訂單。所以，再一次，這是一個非常非常難以預測的問題。

Okay, thank you. And then you have a free cash flow [inaudible] expectation for 2009?

好的謝謝你。然後您對 2009 年有自由現金流 [聽不清] 預期？

There's no reason to believe why we would not be able to generate free cash flow, positive free cash flow, but again I think for the whole year it's a bit too early to predict, but I don't see any reason why it should be substantially different from our bottom-line, given the fact that our customer's payment terms has been stabilized for quite a while and I would just say it's a very short sort of short payment term. So the potential for it to become much longer I think the possibility is quite small and there will be limited CapEx so, again, I don't see any reason why it should be substantially different from the bottom line.

沒有理由相信為什麼我們不能產生自由現金流，正的自由現金流，但我再次認為，對於全年而言，預測還為時過早，但我看不出有任何理由應該是考慮到我們客戶的付款條件已經穩定了很長一段時間，這與我們的底線有很大不同，我只想說這是一種非常短的短期付款期限。因此，它變得更長的可能性我認為可能性很小，並且資本支出將有限，因此，我再次看不出它應該與底線有很大不同的任何理由。

And then in terms of cash dividend payout ratio, in 2009 would you expect that to be any different compared to 2008?

然後在現金分紅率方面，2009 年您認為與 2008 年相比有什麼不同嗎？

It really depends on the P&L. We are a young Company. We are a [Taipei] Company, so we don't really want to commit to a fixed sort of payout ratio or a fixed level of dividends. Having said that, our balance sheet remains quite healthy we believe, so if everything goes well I don't think why people should expect a very different dividend policy from the past, but then next year is I think given the economic situation, I think it's a bit hard to predict. So, again, I emphasize there's a great deal of risk both on the upside and on the down side.

這真的取決於損益表。我們是一家年輕的公司。我們是一家[台北]公司，所以我們真的不想承諾固定的派息率或固定的股息水平。話雖如此，我們相信我們的資產負債表仍然相當健康，所以如果一切順利，我認為人們不應期待與過去有很大不同的股息政策，但鑑於經濟形勢，我認為明年是這有點難以預測。因此，我再次強調，無論是上行還是下行，都存在很大的風險。

(Operator Instructions) Gary Mobley, Piper Jaffray.

（操作員說明）Gary Mobley、Piper Jaffray。

I had more of a strategic question. It seems as though, given the current state of the industry, the glass panel market participants might be in a position to consolidate or might even need to consolidate. So, one, I'm wondering if you agree with that assessment? And, two, how are you trying to manage your business to defend against that or position yourself if in fact that does happen?

我有更多的戰略問題。看來，鑑於行業的現狀，玻璃面板市場參與者可能處於整合的位置，甚至可能需要整合。所以，一個，我想知道你是否同意這個評估？而且，第二，如果確實發生了這種情況，您將如何管理您的業務以防禦這種情況或定位自己？

I think I believe you are referring to large panel primarily, Gary. Well, and I think well we know we have remained the world's number one in terms of market share for quite a number of quarters already and our customer penetration is, I think, as good as one can get, more or less as good as one can get.

我想我相信你主要指的是大型小組，加里。好吧，我想我們知道我們已經在相當多的季度內保持了世界第一的市場份額，而且我認為我們的客戶滲透率是可以達到的，或多或少和一個一樣好可以得到。

And will there be industry [customization] or customer side given the low capacity utilization at the moment and given the difficult technical market at the moment? I think certainly there is a possibility, but we just have to see, you know wait and see how it goes, but I think there's a good chance when that does happen, if that should happen, both sides of the cannibalization may be our customers, may end up to be our customers. Certainly if it is our strong customers sort of taking over our weaker customers it's beneficial to us and visa-versa, but certainly at this stage it's all way too early to speculate.

考慮到目前產能利用率低，技術市場困難，是否會有行業[定制]或客戶方？我認為肯定有這種可能性，但我們只需要看看，你知道等著看情況如何，但我認為當這種情況發生時很有可能，如果發生這種情況，蠶食的雙方可能是我們的客戶，最終可能成為我們的客戶。當然，如果是我們的強大客戶接管我們較弱的客戶，這對我們有利，反之亦然，但當然在現階段推測還為時過早。

Okay and last question for me, are there situations where you have been supplying a vertically integrated glass panel manufacturer that my have been buying drivers from you guys to supplement internal capacity and with the downturn are they trying to bump up their IC driver utilization rates and thus are decreasing their demand with you?

好的，對我來說最後一個問題是，在某些情況下，你們一直在向一家垂直整合的玻璃面板製造商提供我一直在向你們購買驅動器以補充內部產能的情況，並且隨著經濟低迷，他們是否試圖提高他們的 IC 驅動器利用率和因此減少了他們對你的需求？

Well, in theory certainly that's possible. However, if you look at now one of our major customers in Korea, which has a very big in-house supplier, but during this current downturn our-- well, let me put it this way. Our supply to them compared to our overall shipment is relatively strong, in fact, I would say much stronger than the average. Certainly that is partially because I think the customer remains relatively robust in terms of their shipment.

嗯，理論上肯定是有可能的。但是，如果你現在看看我們在韓國的主要客戶之一，它有一個非常大的內部供應商，但在當前的低迷時期，我們——好吧，讓我這麼說吧。我們對他們的供應與我們的整體出貨量相比是比較強大的，實際上我會說比平均水平要強得多。當然，部分原因是我認為客戶在發貨方面仍然相對穩健。

So I think, again, I think-- again I'm referring primarily to large panel, we are seeing Japanese vendors getting less and less shares in this current yen appreciation. You know, it doesn't help them very much in terms of their competitiveness either, so I think there's a good chance guys like us can continue to grow our market share. And secondly, I think when the industry is suffering from a sever downturn people are after the winners because, as I've said, we have the most comprehensive product road map and portfolio and we have the scale. That means we tend to be able to get the best out of our suppliers and in terms of both in terms of commercial terms and in terms of our flexibility for delivery.

所以我認為，我再次認為 - 我主要指的是大型面板，我們看到日本供應商在當前日元升值中獲得的份額越來越少。你知道，這對他們的競爭力也沒有太大幫助，所以我認為像我們這樣的人很有可能繼續擴大我們的市場份額。其次，我認為當行業遭受嚴重低迷時，人們會追逐贏家，因為正如我所說，我們擁有最全面的產品路線圖和產品組合，而且我們擁有規模。這意味著我們往往能夠從我們的供應商那裡得到最好的，無論是在商業條款還是在我們的交付靈活性方面。

So I think for this reason and one other thing I would also add is our financial strength. Very interestingly, recently there were some sort of small panel end customers coming to this part of the world and talking to various vendors and one of their key questions in their questionnaires being your financial strength. It's the kind of question, which were never asked before, but I think the more customers are inquiring about such questions I think the better off we are.

因此，我認為出於這個原因，我還要補充的另一件事是我們的財務實力。非常有趣的是，最近有一些小型終端客戶來到這個地區，與不同的供應商交談，他們問卷中的關鍵問題之一是您的財務實力。這是一種以前從未問過的問題，但我認為詢問此類問題的客戶越多，我認為我們的情況就越好。

We have no further questions in the queue at this time. I'd like to turn the floor back over the Management for any closing comments.

目前我們在隊列中沒有其他問題。對於任何結束評論，我想把發言權轉回管理層。

Well, thank you, everyone, for taking time to join today's call and we look forward to talking to you again at our next earnings call in February next year. Thank you. Good-bye.

好吧，謝謝大家抽出時間參加今天的電話會議，我們期待在明年 2 月的下一次財報電話會議上再次與您交談。謝謝你。再見。

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

女士們，先生們，今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與。