Sat, Sep 02, 2006 - Page 12 News List

Quanta details blueprint on product diversification

BUSINESS SHIFT The firm talked to the media on plans to raise contributions from non-core businesses such as handsets and LCD TV to 30 percent by 2008


Quanta Computer Inc (廣達電腦), the world's largest contract maker of laptop computers, surprised reporters by holding a rare press conference to announce quarterly earnings on Wednesday.

Local media perceived the move as a way to reassure the public that the company's earnings were on track -- despite being dragged down by its money-losing liquid-crystal-display (LCD) unit -- and to introduce changes taking place under a new management, led by its new president, Michael Wang (王震華).

"Our friendly competitors always spoke on our behalf ... but sometimes miss the point and mislead the public. This has created misunderstanding [about the company]," he said.

Wang, who was promoted in June, said he decided that it was time to be more "proactive" to promote transparency.

Speaking at the company's headquarters in Taoyuan on Wednesday, Wang laid out the company's blueprint for its diversification from notebook production to other electronics products over the next few years.

Quanta intends to push non-core businesses -- including LCD TV, handsets, automobile components, digital home products, servers and storage -- to account for at least 30 percent of total sales by 2008, up from the current 19 percent, he said.

These areas would pave the way for Quanta to be a full-fledged solution provider -- from design to production -- of major downstream electronics products, he said.

The company, which accounts for 30 percent of global laptop production, does not see much synergy in merging other notebook makers, as global brand names prefer to distribute their orders among different makers, he said.

As such, Quanta is diversifying into other product segments to drive future growth, he said.

"We will leverage off our leadership in the notebook market to create synergies that will support our new product segments," Wang said.

For handsets, the first non-core business it ventured into in 2000, the focus would be on value-added models such as smart handhelds and third-generation phones, he said.

"Quanta definitely has the ability to `attack' or `address' any one of the local leading handset makers," Wang said.

He was referring to Foxconn International Holdings Ltd (富士康控股), which is leveraging off its experience in the production of various electronics products; Com-pal Communications Inc (華寶通訊), which has been gaining share with its low-cost products; and High Tech Computer Inc (宏達電), which is focusing on smartphones.

Commenting on its alliance with Japan's Sanyo Electric Co, Wang said he has not given up on its goal of forming a joint venture with the Japanese firm.

On Aug. 11, Quanta announced a delay in the proposed venture with Sanyo, and that it was instead investing ?85.5 million (US$740,000) for a 19 percent stake in a new LCD TV unit that Sanyo is spinning off next month.

Meanwhile, market watchers said that by selling off its money-losing LCD panel subsidiary, Quanta Display Inc (廣輝電子), to larger rival AU Optronics Corp (友達光電), Quanta was losing its edge in panel sourcing.

To replicate its success in the notebook industry in other areas, Quanta should beef up its economies of scale on non-core businesses, they said.

It would probably reap better results in handhelds such as mobile phones and global positioning system products, as it has better alliances with other companies in these areas, said Simon Yang (楊勝帆), an analyst with Topology Research Institute (拓墣產業研究所).

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