E Ink has reported its first loss in two years following ten quarters of consecutive profit. Revenues declined by a steep 63 percent to just $131 million, while its gross margin shrunk to a microscopic 0.8 percent from a much higher 28.5 percent in the previous quarter. The decline is said to be the result of excess manufacturing capacity and being forced to move into lower margin LCD panels from higher margin Electronic Paper Display (EPD) products.
Further, E Ink added that its largest clients, which include Amazon, Barnes & Noble as well as Kobo were sitting on stock of e-paper displays. This resulted in lower than expected orders while as there was likely a shift towards low-cost LCD tablets over the same period, including Amazon’s popular Kindle Fire. In response, a backlit E Ink display may appear to counter the tablet challenge.
E Ink chairman Scott Liu was upbeat about the remainder of the year as the first quarter of each year of the company’s existence had traditionally been its slowest, with demand picking up over the remaining quarters. Liu added that E Ink had spent around 10 percent of its revenue on R&D projects, which include enhancing its color E Ink displays.
