A professional accountant who will be running for a seat in the Legislative Yuan later this year accused Compal Electronics Inc (
Representing one of Compal's major shareholders, accountant Lin Ching-lung (
He pointed out that earlier this year Compal insisted on a merger with unlisted Palmax despite the fact the PDA maker has racked up losses of nearly NT$9.5 billion (US$275 million) over the past three years. The accountant questioned the share swap ratio of the two companies, saying it looked as if Compal paid much more for the affiliate than it was worth.
When Compal and Palmax merged, Compal offered one share of its stock for three shares of Palmax stock, which did not make Compal investors happy. One of Compal's major investors, Lai Rung-chen (賴榮振) hired Lin to investigate the company's finances.
The charges brought an immediate response on the stock market yesterday, as skittish investors sent Compal shares down 3.4 percent to finish the trading day at NT$36.6 per share. The firm's share price has dropped 7 percent total over the last three trading sessions. So far, Compal executives have not responded to the allegations.
Analysts, however, said the case is overblown. The impact of the Palmax-Compal merger was limited. Palmax shares account for only 1.1 percent of Compal's capital, and the dilution effect of Compal's takeover of Palmax was only 0.7 percent.
One analyst speculated that the investigation into Compal's finances by a major investor could be a precursor to a lawsuit or a management takeover.
Compal is one of Taiwan's top three notebook computer makers, and one of the few electronics firms posting profits during the high-tech downturn. Compal's second-quarter earnings were a better than expected NT$2.09 billion (US$60 million).
Analysts expect 23 percent revenue growth for Compal in the third quarter due to increasing shipments of notebook PCs and LCD monitors. Contributions from the company's core business, notebook computers, are increasing on a quarterly basis, although its non-core businesses such as PDAs are dragging revenues down.
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