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Prospects improve for Elitegroup after Uniwill acquisition

Elitegroup Computer Systems Co's (精英電腦) acquisition of Uniwill Computer Corp (志合電腦) became formally effective yesterday and analysts said Elitegroup stands a better chance of gaining a larger share of the notebook contract production business next year.

"Elitegroup will be able to win more orders in the second half of next year if it continues to utilize its low-price strategy combined with resources from Uniwill," Sean Ryan (蕭文良), a researcher with Fubon Securities Investment Services Co (富邦證券投顧), said in a phone interview yesterday.

The Taipei-based Topology Research Institute (拓墣產業研究所) expects that the new Vista operating system and Santa Rosa platform will boost the notebook market next year, with shipments growing almost 20 percent to 87.7 million units worldwide, compared to 72.8 million units this year.

Contract makers will definitely ride on the growth to fight for orders, but the top-five makers -- Quanta Computer Inc (廣達電腦), Compal Electronics Inc (仁寶電腦), Inventec Electronics Corp (英業達), Wistron Corp (緯創) and Asustek Computer Inc (華碩電腦) -- will still have an upper hand over smaller rivals, Ryan said.

"Elitegroup and Uniwill will be able to share resources and economies of scale to fight off the hostile environment dominated by strong players," he said.

After buying out Uniwill, Elitegroup will be the sixth largest notebook computer maker.

On July 10 Elitegroup announced its takeover of Uniwill through a share swap with the release of 1.85 billion new shares. One of Elitegroup's share was exchanged for two of Uniwill's.

Last year, Elitegroup's market share of world notebook computer production was 0.01 percent, while Uniwill controlled 3.65 percent, according to statistics from the Fair Trade Commission, which approved the deal in August.

For the first 11 months of the year, Elitegroup posted revenues of NT$52.98 billion (US$1.6 billion), a 163 percent increase from the same period last year.

Boosted by the official merger, shares of Elitegroup yesterday closed up 6 percent to NT$21.1 on the Taiwan Stock Exchange.
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