Despite shipping a record 2.01 million notebook computers in the third quarter, Compal Electronics Inc (
Compal, seen as one of the barometers of the nation's PC industry, reported net income of NT$1.5 billion in the July-September period, or NT$0.45 earnings per share, down from NT$2.65 billion in net income, or NT$0.91 earnings per share, a year ago.
Ray Chen (陳瑞聰), president and CEO of Compal, attributed the quarterly decline to price wars unleashed by local manufacturers competing for orders, which cut into gross margin.
The company's margin for the third quarter was 5.7 percent, down from 6.41 percent in the previous quarter.
For the first three quarters of the year, Compal posted net income of NT$4.89 billion, sliding 36 percent from a year ago, despite a jump in net sales to NT$54.93 billion, up 43 percent from the same period last year.
Fourth quarter
During an investor conference in Taipei, Chen said the company expects revenue to grow in the fourth quarter, a traditional high season for the information technology industry, although the market has been hit by uncertainties such as soaring oil prices.
For the fourth quarter, the company expects to see significant shipment growth across the board.
"We estimate notebook computer shipments to grow by over 15 percent on a sequential basis, LCD monitors to jump by 50 percent quarter-on-quarter, and LCD TVs to increase by 20 percent, driven by seasonal demand, as well as huge demand triggered by plunging panel prices," Chen said.
But the gross margin for notebook computers is dwindling and the company plans to counter this by developing high value-added products such as PDAs (personal digital assistants) phones, CDMA (code division multiple access) phones, GPRS phones, portable media players and servers, Chen said.
The company expects to unveil the new products in the second quarter of next year, he said.
Cost-cutting plans
In addition, the company plans to lower the contribution of notebook computers, accounting for about 83 percent of total revenue this year, to 77 percent next year, Chen said.
Another way to cut costs is by moving more production to China, Chen said. Currently, 30 percent to 40 percent of Compal's handsets are manufactured in China, and the company hopes to move all handset production to the country next year.
As for the industry's prospects for next year, Chen said he believes the laptop industry will continue to boom, citing optimistic remarks made by Intel Corp's vice president Anand Chandrasekher on Monday.
During a visit to Taipei, Chandrasekher told reporters that the annual growth rate of laptop computer shipments for the next four years will be 20 percent, with the figure rising to 30 percent in 2008.
As Intel plans to introduce its new mobile platform for notebooks, codenamed Sonoma, in the first quarter next year, Compal will ship products with the platform prior to the launch, Chen said.
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