Tue, Jul 13, 2004 - Page 10 News List

Notebooks may face sluggish third quarter

By Amber Chung  /  STAFF REPORTER

The nation's portable computer makers could experience an uninspiring third quarter due to the lack of a killer application that could spur consumer demand.

In the absence of a "killer app," demand may be sluggish without steep price cuts for laptops, analysts said yesterday.

"Unlike last year, when the Centrino platform for wireless networking was launched, there is no killer application to stimulate consumer demand in the quarter ahead," said Steven Tseng (曾續良), an analyst with Yuanta Core Pacific Securities (元大京華證券).

The Olympic Games, which will take place in August, could divert consumer spending to other consumer electronics products like liquid-crystal-display television sets or digital video disk players/recorders -- which is not good news for the personal computer sector, he said.

Price cuts for laptops would require a larger-than-expected price reduction in flat panels, Tseng said.

Compared with notebook makers' optimistic projections of up to a 30 percent increase in third-quarter shipments over the previous quarter, institutional investors are generally making conservative estimates of around 15 percent growth quarter-on-quarter.

The bellwether laptop maker Quanta Computer Co Inc (廣達) last week reported unaudited June sales of NT$23.24 billion (US$691 million), a minimal growth of 0.52 percent over the previous month but a small decline of 3.47 percent over a year ago.

Aggregate sales from January through June grew 11.98 percent year-on-year to NT$135.05 billion, according to figures by Quanta.

The company, which expected to ship up to 11 million notebooks this year, remained bullish about its shipments for the third quarter, projecting growth of up to 30 percent over the second quarter.

Quanta's smaller rival Compal Electronics Inc (仁寶) last week posted a record-high revenue of NT$19.92 billion for last month, showing a gain of 30.8 percent over the previous month and an increase of 121.1 over a year before. The company reported sales for the first half of the year of NT$92.09 billion, representing year-on-year growth of 49.7 percent.

Compal, which hopes to produce 8 million laptops this year, projected shipments of over 2 million for this quarter compared to 1.68 million units shipped in the second quarter.

"We think laptop makers may be too upbeat about their future performance," said Frank Chi (紀鈞中), a portable computer analyst at Grand Cathay Securities Co (大華證券).

The market could remain flat this month and may not heat up until after the middle of next month, when it should get help from back-to-school demand in the US and European countries, Chi said.

Institutional investors estimate that Quanta and Compal, the world's two biggest notebook makers, would see respective growth rates of 19 percent and 20 percent over the second quarter, Chi said.

Quanta and Compal are rated neutral by Grand Cathay.

Quanta shares closed at NT$66.50 on the TAIEX yesterday after a drop of 1.48 percent. Compal shares dropped 0.85 percent to close at NT$34.80.

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