Tue, Apr 24, 2007 - Page 12 News List

Compal Electronics earnings up on back of higher shipments

TOP DOG President and chief executive Ray Chen told Compal's annual dinner party that it aims to unseat Quanta and become the No. 1 maker

By Jason Tan  /  STAFF REPORTER

Compal Electronics Inc (仁寶電腦), the world's second-largest laptop computer contract maker, yesterday posted strong quarterly earnings on the back of increased notebook computer shipments.

The company posted an 18 percent rise in net income in the first quarter to NT$2.6 billion (US$78 million) from a year ago, with sales up 63 percent to NT$96.98 billion.

Its earnings per share also increased to NT$0.69 from NT$0.62.

"Compal reported `comfortable' results thanks to strong margins and operating income," said Sean Ryan (蕭文良), a researcher with Fubon Securities Investment Services Co (富邦證券投顧).

Though the computer maker's gross margins fell to 4.8 percent from 5.1 percent a year ago, the figure was a slight increase on the 4.7 percent recorded in the fourth quarter last year.

Taiwanese computer makers are fighting to secure their profit margins due to price erosion resulting from stiff competition.

Compal's first-quarter operating income also hit its highest level since the last quarter of 2003 at NT$3.3 billion.

"We made improvements on economies of scale, efficiency and lowered material costs," Compal president and chief executive Ray Chen (陳瑞聰) said yesterday.

He said notebook computer shipments in the current quarter would total 5.1 million units. The firm produced 4.9 million portable computers in the first three months of the year, an increase of 82 percent year-on-year.

Chen added the full-year shipments target is maintained at 20 million units.

Last year, Compal produced a total of 14.5 million notebook computers, demonstrating a growth rate of nearly 50 percent over the 9.8 million shipped the previous year, the company's statistics showed.

Chen told Compal's annual dinner party last January that it aims to unseat larger rival Quanta Computer Inc (廣達電腦) and become the No. 1 maker this year.

But industry watchers warned investors to be cautious.

"Acer Inc switched some orders to Wistron Corp (緯創) in the second quarter, which will affect Compal's shipments," Ryan said.

Compared to a strong 20 percent shipments growth expected from Wistron in the current quarter, Compal's growth would not be as impressive, he added.

To cope with its expanding capacity, Compal is currently evaluating the possibility of setting up its first factory in Vietnam in 2009.

The company currently has three product lines in Kunshan, China, with a fourth to start mass production in the third quarter.

"China factories will play a more important role in research and development in the future. We will consider moving lower-end manufacturing to Vietnam," he said.

Compal also announced it would pay a cash dividend of NT$1.70 a share, and a stock dividend of 0.5 percent.

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