Wynn expects third-quarter revenue to fall and gross margin to rise

Wistron's cloud computing server subsidiary Wiwynn reported that consolidated revenues for the third quarter were NT$33.35 billion (US$1.09 billion), a decrease of 31.3% from the same period last year, net profit of NT$1.37 billion and earnings per share of NT$7.84.

Wiwynn's gross profit margin in the third quarter was 7.5%, an increase of 0.7 percentage points from the previous quarter and an increase of 1.7 percentage points over the same period last year.

Wiwynn's consolidated revenue for the first three quarters of 2019 was NT$11.105 billion, down 15.2% from the same period last year, but its gross profit margin increased by 0.7 percentage points to 6.8%. Wiwynn's earnings per share only reached NT$25.18 during the nine-month period, down from NT$29.62 in the same period in 2018, due to the company's listing in Taiwan in March.

Although Wiwynn's server shipments are expected to increase year-on-year in 2019, revenues are expected to decline as Wiwynn's overall ASP declines due to lower memory prices. The decline in average selling prices actually translates into higher gross margins for the company.

With the recent signs of stabilization in memory prices, Wiwynn's revenue is expected to resume growth in the first half of 2020, but its gross margin is unlikely to grow.

Overall, Wiwynn's main customers are Microsoft, Amazon and Facebook, and their demand for a new data center is expected to benefit Wiwynn's white-box server shipments by 2020.