Tatung launches into cellphone segment

Tatung Co (大同), a leading television maker in Taiwan, is edging into the mobile phone sector, marking the company's latest effort to find growth areas outside the home appliance business, a company executive said yesterday.

Tatung previously diversified into brand-name digital music players, computers and related products, with the hope of winning orders from international vendors.

"Our sales growth this year is partly due to the increasing contribution from those new products," said company president Lin Wei-shan (林蔚山) on the sidelines of the launch of Tatung's full product line for this year.

Lin said the company's sales this year would jump 15 percent to around NT$350 billion from NT$300 billion last year.

Tatung aims to boost its own-brand mobile handset sales to at least 60,000 units this year from nothing, after expanding its product portfolio to as many as 10 models, Lin said.

The company debuted its first handset in the beginning of the year.

Additionally, Tatung has ambitions to expand outside its home turf to develop liquid-crystal-display (LCD) TVs and MP3 players.

The company said it would make 500,000 LCD TVs and 1 million MP3 players this year, mostly for overseas customers.

"The Taiwan market serves as a testing ground. Our ultimate purpose is to make phones for international brands," Lin said.

But industry watchers expressed caution over whether the TV maker will be able to make quick profits from the new business.

"It's understandable that Tatung is expanding into the wireless communications sector as its Chinese counterpart, Haier Group (海爾), is doing the same thing," said Steven Tseng (曾續良), an analyst at Yuanta Core Pacific Securities (元大京華證券).

"But Haier is struggling to make money from the phone business," Tseng said.

Helen Chen (陳佩君), an analyst with Polaris Securities Co (寶來證券), doubted Tatung would be able to compete with Taiwan's existing handset assemblers, including BenQ Corp (明基電通) and Compal Communications Inc (華寶通訊).

"It will be difficult for entrant Tatung to snare orders from existing players as they maintain quite good ties with their customers, such as Motorola Inc, who tend to keep the same suppliers," Chen said.

What worries Chen is whether Tatung's LCD panel manufacturing affiliate Chunghwa Picture Tubes Ltd (中華映管) will be able to return to profitability this year.

"Chunghwa Picture Tubes could be a burden dragging down Tatung's earnings this year," Chen said.

Tatung last year posted a NT$4 billion non-operating loss due to Chunghwa Picture Tubes.

Adding in another possible losing year for the LCD manufacturing arm this year, Chen projected that Tatung's earnings for this year would slide to NT$0.5 a share, from NT$1.27 last year.

Tatung's shares fell for the seventh straight trading session yesterday to close at NT$11.45 on the Taiwan Stock Exchange.