Tue, Aug 31, 2004 - Page 10 News List

Quanta's Q2 profit falls

BLOOMBERG

Quanta Computer Inc (廣達電腦), the world's biggest notebook computer maker, had a 7.2 percent drop in second-quarter profit, lagging analysts' expectations, because of competition and a delayed rollout of new computer models.

Net income dropped to NT$2.96 billion (US$87 million) from NT$3.19 billion a year earlier, according to a report from the Taoyuan, Taiwan-based company. Quanta was expected to earn NT$3.37 billion, based on the median of five forecasts from analysts surveyed by Bloomberg News.

Component prices and market competition "are still giving us quite a lot of pressure," chief operating officer Michael Wang (王文華) told investors during a telephone conference call today. Changes in timing the introduction of a new product model also caused a drop in earnings, Wang said.

Quanta, Compal Electronics Inc (仁寶電腦) and other Taiwan personal-computer makers are cutting prices to get more orders from customers such as Dell Inc, Hewlett-Packard Co and International Business Machines Corp.

"Their core earnings from the notebook business continued to come down," said Frank Lee, an analyst at Deutsche Securities Asia Ltd in Taipei. "There's just overall more margin pressure on the core business."

The Taiwanese manufacturers are also trying to diversify into handsets, servers and flat-panel displays used for computers and televisions. Quanta owns about a fifth of Quanta Display Inc (廣輝電子), a venture with Japan's Sharp Corp that makes flat-panel displays used in desktop monitors and notebook computers.

Quanta's second-quarter profit was lower than expected partly because of higher taxes, Deutsche's Lee estimates. He said he will keep his "hold" recommendation on the stock.

Operating profit fell 37 percent to NT$1.4 billion, the company reported. Sales climbed 6.2 percent to NT$69.4 billion, based on monthly sales figures released earlier.

Quanta, whose clients include Dell and Apple Computer Inc, gets more than four-fifths of its revenue from notebook computers. The company's forecast of laptop shipment growth of 20 percent to 30 percent in the current quarter from the second quarter sounds "aggressive," Deutsche's Lee said.

Quanta said it expects demand for new models that feature audio-visual parts to drive the growth..

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