Compal aims to overtake Quanta

Compal Electronics Inc (仁寶電腦), the world's second-largest laptop computer maker, said that it aimed to unseat larger rival Quanta Computer Inc (廣達電腦) to become the world's top laptop computer maker this year.

"We achieved outstanding re-sults last year and are gearing up to become the top notebook computer maker in the world," Compal president and CEO Ray Chen (陳瑞聰), said at the company's annual dance-and-dinner party on Saturday.

Last year, Compal produced a total of 14.6 million notebook computers, demonstrating a growth rate of nearly 50 percent over 9.8 million shipped a year ago, the company's statistics showed.

Total shipments this year are estimated to expand 37 percent to over 20 million units, Chen said.

The race between the world's top-two makers is a close one, as Quanta shipped 19 million last year, slightly up from 18 million a year ago.

It aims to ship 25 million units by year's end.

Compal will continue to diversify into other product segments such as digital media and automotive electronics, in a bid to reduce dependence on the notebook computer productions, whose shrinking margins account for 90 percent of Compal's sales, Chen said.

The firm has said it expected non-laptop sales to account for 20 percent of total sales by next year.

However, industry watchers are skeptical of Compal's ability to post high earnings as losses by its affiliates continue.

"Losses of TPO Displays Corp and Vibo Telecom Inc (威寶電信) are still expected to eat into its profitability for at least the first half of the year," said Molly Lin (林美如), an analyst with Polaris Securities Co (寶來證券).

However, Lin forecast that Compal's laptop shipments would increase at least 30 percent because of orders from Acer Inc and Hewlett-Packard Co.

TPO Displays, the world's second-largest maker of handset displays, was formed last June after Toppoly Optoelectronics Corp (統寶光電) bought Philips Mobile Display Systems, a unit of Royal Philips Electronics NV. Compal owns 25.1 percent of TPO Displays and 17.5 percent of Philips Mobile Display.

Compal also has a 29 percent stake in Vibo, the nation's leading third-generation telecom operator, which is not expected to go in the black until the first quarter of next year.

Echoing Lin's comments, Macquarie Research Equities analyst Daniel Chang (張博淇) wrote in a report on Friday that losses of these two affiliates would continue to disappoint investors.

"Our recent figures suggest that both Vibo and TPO Displays will erode nearly NT$2 billion [US$60.96 million] in investment for Compal, which is almost 18 percent of its earnings this year," he said.

Investors would remain pessimistic until Compal showed clear signs of investment recovery or the company managed to reduce its investment ties to the two companies, he said.

However, Rock Hsu (許勝雄), chairman of Kinpo Group (金仁寶集團), which owns Compal, said the two companies would become a major source of revenue for Compal, because capital would be injected into Vibo and TPO Displays would undergo restructuring this year.

"This will be the year for both firms to hit rock-bottom [and rebound the following year]," he said.