Quanta's income doubles on strong laptop demand

Quanta Computer Inc (廣達電腦), the world's largest portable computer contract maker, yesterday said its net income doubled in the second quarter on the back of strong notebook shipments.

The company posted a net income of NT$4.2 billion (US$128 million), or NT$1.26 per share, in the quarter ending June, marking a rise of 101 percent from NT$2.1 billion, or NT$0.65 per share, from the same period last year.

Sales hit NT$153.9 billion, up 52 percent from a year ago.

The company continued to churn out more orders for clients in the second quarter, shipping 7.4 million laptops, spokesman Elton Yang (楊俊烈) told reporters yesterday at its Taoyuan headquarters.

The figure represents a sequential growth of 16 percent and annual growth of 72 percent, he said.

"Shipments in the current quarter will rise at least 15 percent from the previous three months," as the sector enters its high season and the launch of the Vista operating system and Santa Rosa platform drive replacement demand, Yang said.

Quanta's new president, C.C. Leung (梁次震), said yesterday that the company's laptop shipments would grow to 35 million units next year, up from projected shipments of 28 million this year.

He said that gross margins would remain under pressure next year because of price-cutting competition for orders.

"We hope to maintain or see a slight rise in margin levels next year," he said, without elaborating.

Quanta reported a gross margin of 4.1 percent in the second quarter, slightly up from 4 percent in the first quarter, but down from 5.4 percent in the corresponding period last year.

Smaller rival Compal Electronics Inc (仁寶電腦) posted a margin of 4.8 percent last quarter.

To improve sagging margins, Quanta said it would continue to push non-notebook products, which include handheld devices, servers, flat-panel TVs and automobile electronics.

These non-core products are expected to account for 23 percent of total revenues this year, slightly down from the 25 percent it projected earlier.

As for the One Laptop per Child project, Quanta said shipments had been delayed by a month to October to enhance product specifications.

It refused to reveal target shipments, but earlier reports said the company would ship 10 million units in the first year.

Meanwhile, Leung, Quanta's vice chairman before he was elected to replace Michael Wang (王震華) as president last week, expressed confidence in his new role.

Leung helped set up Quanta's research and development team and then moved on to manufacturing in 1993 and to sales in 1996.

"Media reports that I don't have a sales background like Wang are not true. I had a good time dealing with the US and Japanese clients," he said.