On May 15, Diguang International Development Co., Ltd., whose sales and marketing subsidiary is registered in the British Virgin Islands, announced financial results for the first quarter of the fiscal year 2007.
Diguang International reported net revenues of $6.8 million represented a decrease of $2.0 million, or 22.7% from $8.8 million in the quarter ended March 31, 2006. The decrease in net revenues was primarily due to continuing pricing pressure in the backlight industry and a shortage of raw materials. Gross profit for the Q1 2007 totaled $1.3 million, a 56.5% decline if compared to gross profit of about $3.1 million for the same period of the previous year.
Gross margins for the first quarter of 2007 were 19.8% – this is a 15.3% decrease compared to 35.1% for the same period of 2006. The decline of gross margins is due to industry-wide pricing pressure, which amounted to an average pricing decline totalling fully 24% on the Company’s existing products, an increase in labor costs and production overhead per unit.
For the first quarter ended March 31, 2007, the company posted a loss of $0.05 per share, while in the corresponding period of 2006 the company reported earnings per share of $0.10.
Total operating expenses (general and administrative, research and development and selling) for the first quarter of 2007 were $2.6 million, or 37.9% of net revenues, compared to $1.0 million, or 11.7% of net revenues, for the same quarter of the prior year.
First-quarter 2007 selling expenses totaled approximately $626,000, or approximately 9.3% of net revenues, a 181% increase compared to first-quarter 2006 selling expenses of approximately $223,000, or 2.5% of net revenues. This is the result of Company’s efforts to expand market share and promote new products such as backlights for monitors and television sets, driving increases in the Company’s sales staff headcount, higher sales incentives and higher advertising and trade show expenses.