Thu, May 15, 2003 - Page 10 News List

Disease boosts disk sales

HOME ENTERTAINMENT Domestic diskmakers appear to be doing well as people choose to stay at home and use their computers to avoid the infection

By Bill Heaney  /  STAFF REPORTER

Recordable disk sales are increasing as people stay home playing on their computers to avoid catching SARS, industry leaders said yesterday.

More people are burning music and video onto blank disks which has given one of the world's two largest disk-makers CMC Magnetics Corp (中環) a welcome boost, its chief executive officer Bob Wong (翁明顯) told investors yesterday.

In the first four months of this year, CMC has seen its sales rise 11 percent from NT$3.9 billion in the same period last year to NT$4.4 billion this year. Profit has gone up 40 percent in the same period to top NT$406 million due to increased demand and a rise in prices after a serious slump last year.

With more than 40 disk-makers worldwide pumping out product last year, prices crashed to an all-time low, forcing many small players out of the market.

This year CMC has only 10 rivals, Wong said, giving the industry some room to restrict demand and push prices back up.

CMC's biggest rival, Ritek Corp (錸德), has also noticed a sales increase as a result of the SARS outbreak.

"We have seen some impact in the domestic market as more people are staying home and burning their own music and video disks," said Ritek spokesman Sean Lee (李其韗).

"There are also fewer people coming to Taiwan to do business, so companies are making more catalogs on disk to send to their overseas customers," he said.

But analysts rejected the SARS effect as an explanation of the current strong demand for recordable disks.

"The explanation is that last year there was too much inventory so all manufacturers have since tried to shift their products" said Nathan Lin (林宗賢), an analyst at SinoPac Securities Corp (建華證券).

Over at Primasia Securities Co, William Fong (方偉昌) said he was "conservative about the SARS effect," and also pointed to a reduced supply of recordable disks.

"There is a low capacity of recordable CDs at the moment as companies shift some of their production to DVDs," Fong said.

Blank DVDs have dropped dramatically in price over the last 12 months. DVDs -- which can store over six times the amount of data a CD can -- are now only US$0.10 more expensive than CDs, leading to an increase in demand.

Fong believes the positive effect of people staying at home is isolated.

"I believe that people staying at home, surfing the Internet and doing computer work leads to more disk sales, so SARS has had a positive effect, but this is limited to the Greater China region only," he said. "Companies such as Ritek supply the majority of their products to the US and Europe."

Disk makers saw their shares rise slightly yesterday in Taipei.

CMC rose NT$0.1, or 0.5 percent, to close at NT$17.7. Ritek also went up NT$0.1, or 0.7 percent, to end the day at NT$15.

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