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Analysts forecast little impact from `HP cut'

Shares of Hon Hai Precision Industry Co (鴻海精密) and Asustek Computer Inc (華碩) held steady yesterday, despite warnings by industry watchers that US computer giant Hewlett-Packard had cut its desktop PC orders.

HP, the world's largest maker of personal computers, has reduced its desktop PC orders for the fourth quarter, Goldman Sachs & Co said in a report yesterday, citing unidentified industry sources.

Reductions "are mainly from the US, with some from selected emerging markets, but so far no impact from Europe," Taipei-based analysts Henry King (金文衡) and Matthew Chuang said in the report.

However, the impact on Asustek and Hon Hai, which have a "high exposure" to HP, will be limited, as the two companies have orders from other companies to fall back on, the report said.

The stock price of Hon Hai, the world's biggest electronics manufacturing service provider, was unchanged at NT$236.5 yesterday, versus the benchmark TAIEX's 1.1 percent gain. Shares of Asustek, the world's top motherboard supplier, inched up 0.1 percent to NT$96.6.

Concerns over inventory and slowing demand given more conservative forecasts by retailers may have prompted HP to reduce orders, the report said.

Liana Teo, a Singapore-based HP spokeswoman, declined to comment on the report.

Vincent Chen (陳豊丰), a senior technology analyst with CLSA Ltd's Taipei branch, said he expected "limited impact to our PC companies' forecast, especially ... Hon Hai and Asustek."

Chen said he had yet to see clear signs of slowing end demand.

Dell Inc, the world's No.2 PC brand, has not changed its forecast for the final quarter, while Acer Inc and Lenovo Group Ltd (聯想) have maintained their aggressive growth projections, he said.

The nation's major PC contract manufacturers could still see an uptick in revenues this month, Chen said.

Given his positive outlook on PC companies' revenue in the third and fourth quarters, Chen retained his "buy" ratings on Hon Hai and Asustek, with 12-month target prices of NT$290 and NT$118.1 respectively.

Meanwhile, Citigroup analyst Kirk Yang (楊應超) said it was too early to tell whether HP had reduced PC orders, the Chinese-language online news outlet cnyes.com cited him as saying yesterday.

Yang expects PC demand to remain robust after the back-to-school sales with the approach of the Christmas holiday season and forecast uptick in corporate spending before the end of the year, the online news report said.
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