InfoDisc reports record losses in first half of 2004, chairman resigns

September 20, 2004

Taiwanese Infodisc Technology reports a record loss the first half of 2004. The chairman of the company was for five minutes too upset to talk during a press conference. The chairman who is also founder of the company (1995) was once voted as China's most successful businessmen but now had the hard job to admit that he and his company made a wrong investment in US company MediaCopy which was the main reason of the record loss. InfoDisc was mainly into replication of CDs and DVDs but also had a decent marketshare in the CD recordable market.

Speaking on Sept. 6, Lu said that his ambition should be blamed for the company's problems. He was referring to a decision to expand into the US, Germany, Japan and South Korea over a short period, and a failure to see that the market was becoming flooded with cheap Chinese competitors. Chinese makers have staged brutal price wars, eroding the huge profits of Taiwanese companies.
"My high self-esteem and arrogance were behind the biggest mistake of my life," Lu said. The market for optical storage media products such as recordable compact discs (CD-Rs) and recordable DVDs (DVD-Rs) is very competitive and highly cyclical. Prices of DVD-Rs, which generate higher gross margins than CD-Rs, face pressure as manufacturers are continuing to expand capacity.
Similarly, Lu made another mistake by acquiring Mediacopy on the presumption that the US firm would help secure orders from Metro-Goldwyn-Mayer. The dream vanished after MGM decided not to extend its cooperation with Mediacopy earlier this year.

The Taipei Times has more on this story with interesting backgrounds on the company and its chairman who came from a successful Taiwanese family but became a successful entrepreneur by himself.

Source: Taipei Times