Asustek's shares rise after news of landing contract

Shares of Asustek Computer Inc (華碩電腦) rose yesterday after a report announced that the Taiwanese company had secured a contract from Hewlett-Packard Co for notebook computers.

Asustek declined to comment on the report, citing customer confidentiality. Asustek's share price went up NT$0.8 to close at NT$86.3 on the Taiwan Stock Exchange.

A Chinese-language newspaper reported yesterday that Asustek, Taiwan's largest motherboard maker, landed an order to manufacture laptops for US computer giant HP, with shipment to start at the end of the year.

The order was the first that Asustek obtained from the world's top five notebook computer makers. The company currently manufactures notebook computers for companies such as Apple Inc, Sony Corp and Samsung Electronics Corp.

HP Taiwan said that both sides are well positioned to cooperate, according to the report.

Asustek, the nation's fifth-largest notebook computer maker, has been eager to get a foothold in the market and beat rivals such as Hon Hai Precision Industry Co (鴻海精密), MiTAC International Corp (神達電腦) and Tatung Co (大同) to win an order to make desktop personal computers for Sony earlier this month.

Apart from motherboards, Asustek has been keen to win orders for notebook computers from HP after its recent defeat in bidding for HP's Presario B-series laptop computers. The order went to Arima Computer Corp (華宇電腦), the report said.

Last year, Asustek shipped 2 million OEM notebook computers and 2.88 million brand-name laptops, the report said. The company plans to ship 3.8 million notebook computers this year with OEM orders accounting for 2.3 million units, according to the report. With the boost from HP, the target is achievable, it said.

While celebrating the new order, Asustek is getting a headache over labor disputes after the company dismissed 385 employees in its Taoyuan plant early this month.

The employees claimed that the company applied an incorrect formula to calculate severance pay and therefore damaged their interests.

As a result of negotiations steered by the Taoyuan County Government's Bureau of Labor Affairs, the two parties reached an agreement yesterday when Asustek consented to pay 13.5 months of their monthly salaries to each worker as severance pay.

Asustek will continue to cut its local factory workforce, amounting to a total of 1,000 workers out of 4,000 by the end of the year, and move production to its new plant in Shanghai, which is to be inaugurated next year.