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Asustek's profit in 2Q disappoints as sales remain slow

Asustek Computer Inc's (華碩電腦) second-quarter net income unexpectedly fell 14 percent as sales and profit margins shrank at Taiwan's biggest maker of boards that connect the various parts needed to run a personal computer.

Profit dropped to NT$2.92 billion (US$84.4 million) from NT$3.4 billion in the same period a year ago. Sales in the second quarter fell 7 percent to NT$16 billion. Second-quarter profit was calculated by subtracting Asustek's first-quarter earnings from its profit in the first six months of this year. Asustek, considered a bellwether for PC demand worldwide, suffered as PC sales fell in the second quarter for the first time in 15 years. Dell Computer Corp, the biggest direct seller of PCs, said last week its third-quarter profit will miss forecasts and predicted the slump may last until next year.

"Earnings in the second-half may deteriorate as we haven't seen any cost cutting plan from the company management and as demand for PCs may not increase," said Cheng Yi-sheng, who helps manage NT$1.5 billion (US$43 million) in investments at Taiwan Securities (台証證券).

Shares in Asustek, which also makes notebook computers, fell NT$2.5, or 1.9 percent, to NT$130.5. The stock has gained 68 percent this year.

"There will be another wave of downward earnings revisions for the full year," said Tony Tseng, an analyst at Merrill Lynch Taiwan Ltd, who may cut his 2001 profit forecast for the company of NT$17.5 billion.

Asustek's profit was expected to rise to NT$3.7 billion, according to the average forecast of four analysts surveyed.
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