Mon, Apr 17, 2006 - Page 12 News List

Quanta Computer seeking new profit drivers

By Jason Tan  /  STAFF REPORTER

In comparison, laptop computers would need around 18 years from their introduction to be able to overtake desktop computers and account for half of the global computer market by 2008, he said.

And that's not the limit of Quanta's ambitions.

In a surprise move on April 7, the company announced that it was selling off its affiliate Quanta Display to AU Optronics, the third-largest manufacturer of LCDs in the world.

The combined entity will create a bigger LCD-panel maker whose market share could exceed that of market leaders Samsung Electronics Co and LG.Philips LCD Co, according to iSuppli Corp.

By saying goodbye to its money-losing affiliate, Quanta Computer would see an easing of its cash flow and financial burdens, Lin said.

According to Taiwan Stock Exchange statistics, Quanta Display posted a net loss of NT$9.14 billion, or a loss per share of NT$2.16, in the first three quarters of last year. The company had recorded a net income of NT$8.53 billion, or earnings per share of NT$2.16, for the full year in 2004.

According to Ken Yu (余文耀), an analyst with SinoPac Securities Corp (建華證券), this latest deal may strengthen Quanta Computer's relationship with BenQ Corp (明基), which owns around 9 percent of AU Optronics' shareholding.

Chances are high that BenQ will outsource its new BenQ-Siemens handset production to Quanta Computer, which is losing out in this segment to strong rivals such as Compal Communications Inc (華寶通訊), he said.

"The AU Optronics-Quanta Display merger has laid out a complementary foundation for both BenQ and Quanta Computer, but how the latter can really benefit from this will depend on whether its handset technology can meet BenQ's requirements," Lin said.

Quanta Computer has not been faring well in the handset market, with only a handful of orders from Panasonic and older Siemens models, she said.

"These recent partnerships show that Quanta is eager to secure future potential cash cows, as it tries to lower its reliance on notebooks," Lin said.

"We expect to see more mergers and acquisitions from the company soon," she added.

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