Amkor Technology: Consistent Growth, But Can It Control Debt? (AMKR)

Apr.27.06 | About: Amkor Technology, (AMKR)

Amkor Technology (Nasdaq: AMKR), the provider of advanced semiconductor assembly and test services, announced another strong quarter today, setting it apart fom a number of other companies in the industry. Most aspects of the company's microelectronics design and manufacturing services did well.

Revenue rose sharply from Q1 05, moving up to $645.1 million from $417.5. Operating income was $85.3 million compared to a loss of $76 million a year ago, which included a $50 million contingency for legal settlements. The company said Q2 06 sales could be up as much as $4% over Q1.

The quarter adds to a record of consistent growth at Amkor. Revenue in 2003 was $1.604 billion. In 2004, that rose to $1.901 billion. In 2005, growth slowed somewhat to $2.1 billion and operating profit dropped to $29.9 million from $109.2 million in 2004. But, based on Q1 numbers and guidance, its would appear that operating profit is marching upwards again.

Despite a rise in the company stock that took the price from a 52-week low of $2.87 to the current high of $12.50, the company still trades at only .93 times sales. The company does have over $1.9 billion in debt. The company said it is in the process of paying down some of these notes and the $39 million in free cash flow generated in Q1 should help. Interest expense during the quarter was over $41 million.

Amkor is doing well, very well. If it can continue its growth and demonstrate that it can improve a balance sheet that is probably not the envy of the industry, the stock has the chance to trade above one time its sales. But getting the debt down may well be the key.

Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He is also the former president of, which was the 10th most visited site in the world at the time, according to MediaMetrix. He has been chief executive of FutureSource LLC and On2 Technologies, Inc. and has served on the boards of and Edgar Online. He does not own securities in companies he writes about. He can be reached at