Deswell net income falls to $4.970 million in first half of fiscal year
Key Facts
Deswell Industries reported net income of $4.970 million for the six months ended September 30, 2026, down from $7.519 million in the year-earlier period, as earnings per share fell to $0.31 from $0.47. Results for the first half of fiscal 2027 showed revenue was nearly unchanged, but profitability narrowed as gross profit and operating income declined. In a separate announcement, GINSMS said its net loss from continuing operations was C$325,970 for the nine months ended September 30, 2026, compared with a loss of C$447,337 a year earlier. The results point to different trajectories: Deswell’s profit declined despite broadly stable sales, while GINSMS narrowed its loss as revenue continued to fall. Deswell shares closed at $3.02 on November 12, 2026.
Deswell sales totaled $33.021 million in the first half, down 0.6% from $33.230 million in the same period of 2025. The company attributed the decline mainly to a $1.090 million drop in electronics sales, partly offset by an $881,000 increase in plastics sales. Chief Executive Edward So said revenue “remained largely stable” despite cautious spending in end markets and weak customer demand. He added that supply-chain volatility delayed the timing of new product launches. The company cited long component lead times and limited availability among the factors that postponed launches.
Deswell gross profit fell to $6.542 million from $7.788 million a year earlier, while operating income dropped to $879,000 from $2.514 million. Gross margin declined to 19.8% of sales from 23.4% in the year-earlier period. The company attributed margin pressure to cautious spending and weak demand, as well as delays to new product launches caused by supply disruptions. It also cited higher costs as the renminbi strengthened and minimum wages rose. The decline in operating income coincided with lower net income and earnings per share in the first half.
Deswell had $22.429 million in cash and cash equivalents on September 30, 2026, compared with $23.382 million on September 30, 2025. The company said it had no short- or long-term borrowings at that date. It declared a cash dividend of $0.10 per share for the first half of fiscal 2027. The dividend will be paid on December 23, 2026, to shareholders of record on December 2, 2026. These dates provide a clear timeline for shareholders eligible for the distribution.
By contrast, GINSMS revenue from continuing operations fell to C$817,005 for the nine months from C$866,608 a year earlier. Gross profit, however, rose to C$397,773 from C$327,278, as operating expenses and financing costs declined to C$723,743 from C$774,430. This reduced the loss from continuing operations to C$325,970, compared with C$447,337 in the year-earlier period. The results therefore combine lower revenue with higher gross profit and lower expenses. The company also recorded a decline in its cash and bank balances during the period.
GINSMS ended its messaging services business on June 30, 2026, saying the decision was part of a strategic shift toward its software products and services after competitive pressures and uncertain profitability in messaging. The company aims, according to its statement, to adopt an outsourcing model and benefit from a lower cost base in Indonesia and Malaysia. It said it had more than 100 successful deployments worldwide and that software-segment revenue in those two markets is “expected to continue to increase.” Cash and bank balances were C$70,915 on September 30, 2026, down 54.7% from C$156,385 on December 31, 2025. The company attributed the decline to higher net cash outflows from operating activities and lower net cash inflows from financing.