Citigroup analyst Kirk Yang (楊應超) suggested yesterday that investors consider switching from personal computer stocks into laggards such as mobile phone stocks on nascent signs of unusually sluggish demand in the fourth quarter.
Electronics makers Asustek Computer Inc (華碩電腦), Hon Hai Precision Industry Co (鴻海精密), Delta Electronics Inc (台達電) and China's laptop computer maker Lenovo (聯想) are top picks as they would benefit from consumer electronics such as iPhone and X-Box, Yang told a press briefing in Taipei yesterday.
Asustek will benefit from its new low-priced laptop computer, "Eee PC," which is set to hit stores next week, he said.
Handset component suppliers Silitech Technology Corp (閎暉) and Unimicron Technology Corp (新興電子) are good additions to an investment portfolio, he said, in place of PC maker Wistron Corp and computer motherboard supplier Microstar International Co (微星).
"We adjusted our investment strategies because we are seeing early signs of a weakening PC sector in the fourth quarter after the sector enjoyed three respectable quarters," Yang said.
That was despite a long-term positive view on the PC sector, Yang said, adding that "Overall, we are optimistic about 2008."
Global PC shipments would grow 14 percent year-on-year this year and 11 percent next year on corporate PC replacement demand, he said.
"Most companies that are attending the conference said they are quite bullish about long-term prospects, but they are conservative about the fourth quarter," Yang said, referring to the two-day investment conference Citigroup held in Taipei yesterday and today.
But, there was short-term risk.
"The fourth quarter will not be a peak season as it was, mostly because PC vendors do not have confidence in Christmas holiday sales this year partly because of lingering subprime credit problem in the US," Yang said.
Notebook computer shipment may increase by just 6 percent at quarter pace in the final quarter of the year, much slower than the six-year average of 22 percent, he said
"We are seeing growing shipments and handset companies are quite confident about holiday sales especially in emerging markets such as China and India," he said.
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