Quanta posts weaker-than-expected earnings

Quanta Computer Inc president Michael Wang gestures yesterday during a report on the firm's second quarter in Linkou. The company said its net profit in the three months ended June 30 was NT$2.11 billion (US$64.19 million), just slightly higher than the NT$2.10 billion in the second quarter of last year. PHOTO: AP

Quanta Computer Inc (廣達電腦), the world's largest notebook maker, yesterday announced weaker-than-expected quarterly earnings due to growing losses in its liquid-crystal-display (LCD) unit.

Net income for the second quarter grew slightly to NT$2.11 billion (US$64 million) from NT$2.10 billion a year earlier, while gross margins slipped to 5.4 percent from 6 percent, Quanta said.

Earnings per share remained unchanged at NT$0.65, while net sales rose 15 percent to NT$100.93 billion.

"Margins in the third quarter will remain stable," company spokesman Tim Lee (李杜榮) told reporters at Quanta's Taoyuan headquarters.

Quanta expects to see significant earnings improvement after the disposal of its LCD unit is formally concluded by Oct. 1, he said.

Quanta announced in April that it would sell Quanta Display Inc (廣輝電子), in which it holds a 27 percent share, to larger rival AU Optronics Corp (友達光電) for NT$71.7 billion in stock.

Seasonal factors will account for a 20 percent rise Quanta's notebook shipments in the current quarter from the previous quarter, when it shipped a total of 4.3 million units, said Jason Lin (林群傑), director of the strategic investment division.

Volume in the fourth quarter will hit an average of 2 million notebooks per month, which will set a new record high, he said.

Quanta, which holds around a 30 percent share of global laptop production, sees its whole-year shipments totaling 21 million units, adjusted from the 24 million figure it set earlier this year, Lin said.

Smaller rival Compal Electronics Inc (仁寶電腦) told investors earlier this month that it was sticking to its forecast of shipping 15 million laptop units this year.

Meanwhile, Quanta's LCD TV shipments are expected to rise gradually during the second half on 32-inch and above models.

Quanta said earlier this month that it was putting off a proposed joint venture with Japan's Sanyo Electric Co for one year, citing complexity in organizational cultures and unfavorable conditions in the panel industry.

Michael Wang (王震華), Quanta's new president, rebutted market speculation that the deal would not go through, saying discussions were still underway with Sanyo to work toward the joint venture goal.

He said Quanta was in a transitional phase as it pushes non-core businesses -- including LCD TVs, handsets, automobile components, server and storage products -- to account for at least 30 percent total sales by 2008, up from the current 20 percent.

Shares of Quanta closed up 3.3 percent to NT$44.8 on the Taiwan Stock Exchange yesterday.