Lite-On hopes site will lure orders

Lite-On Group (光寶集團) yesterday got a leg up on the competition for new orders from Hewlett-Packard Co by signing a deal to work with the company on e-commerce site www.com2b.com.

"We hope to strengthen our relationship with H-P and Com2B," said Chen Guang-chung (陳廣中), deputy CEO of Lite-On, who added that his company's revenues would be NT$150 billion this year, up almost 20 percent over last year.

Although he declined to say where new orders to his firm would come from, analysts believe H-P could be the source.

Taiwanese companies from Asustek Computer Inc (華碩電腦) to Zyxel Communications Corp (合勤) have been waiting for the new H-P to decide on how and from whom it will buy nearly US$14.5 billion in computer hardware this year, accounting for 10 percent of the nation's exports.

"Everybody is trying to get involved with H-P because they are consolidating their suppliers after their merger with Compaq," said Nicholas Teo, a technology industry analyst at ING Barings in Taipei.

The combined company is a US$78.8 billion juggernaut, second only to International Business Machine Corp in terms of revenue and scope of business.

Lite-On, which is in the midst of merging four of its own companies into one, sold NT$128.2 billion in computer parts last year, including PC monitors, scanners and power supplies to Compaq.

Analysts believe new orders from H-P are the cause for Lite-On's projected NT$150 billion in revenue this year.

Investors were clued in days ago. All of the four Lite-On companies involved in the merger, Lite-On Electronics Corp (光寶電子), Lite-On Technology Corp (源興科技), Silitek Corp (旭麗) and GVC Corp (致福), saw their stock prices rise the 7-percent limit on Tuesday and smaller increments yesterday, despite a plunge in the stock market.

One analyst cautioned that profits might be thin on the new sales. Post-merger H-P is looking to reduce costs by US$5.5 billion over the next two years and has been squeezing the profit margins of its Taiwanese suppliers to aid in overall savings.

The new Web site project the companies are working on combine the strengths of another Lite-On subsidiary, Lite-On eOking Inc (光寶旭網) with Com2B Corp (首席電子), an online procurement Web firm started by Compaq Computer and CommerceOne.

According to Rosemary Ho (何薇玲), the head of H-P in Taiwan and chairwoman of Com2B, now is the perfect time for companies to sign on with the Web site, as it will help cut operational costs by an estimated 11 percent to 16 percent and aid in cross-strait trade between Taiwan and China.

The site's organizers say they already have 70 companies with operations in Taiwan and China in their system and more than NT$1.37 billion in procurement purchases have passed through. Lite-On Group estimates it has saved NT$200 million by facilitating trade through the site.

"Consolidating our operations online has saved us a lot of time and money," Chen said.