Thu, Nov 22, 2007 - Page 12 News List

Notebook makers' shares fall amid US economic fears

By Kevin Chen  /  STAFF REPORTER, WITH CNA

Most domestic notebook computer makers saw their share prices drop yesterday due to concern over weakened consumer demand, despite Hewlett-Packard Co's (HP) positive outlook for this quarter.

Compal Electronics Inc (仁寶電腦), the world's second-largest laptop maker, led the decline among notebook computer stocks, falling 4.2 percent to close at NT$38.8 on the Taiwan Stock Exchange.

Shares of Quanta Computer Inc (廣達電腦), the world's largest notebook computer maker, ended 1.58 percent lower at NT$49.9, while those of Wistron Corp (緯創) were down 0.17 percent to NT$59.9.

Wistron is a spin-off of Acer Inc. It supplies notebooks to customers including Acer, Dell Inc and HP.

Asustek Computer Inc (華碩電腦), which supplies laptops to Dell and launched its brandname Eee PCs last month, saw shares rise 0.4 percent to NT$100.

"The share price fall in this sector was caused by the overall market weakness" desspite of HP's favorable balance sheet on Tuesday, Daniel Chang (張博淇), an analyst at Macquarie Research in Taipei, said by telephone yesterday.

The benchmark TAIEX dropped 196.75 points, or 2.27 percent, to 8,484.11, with foreign institutional investors selling a net NT$19.9 billion (US$615.2 million) worth of Taiwanese stocks yesterday, the exchange's tallies showed.

On Monday Hewlett-Packard released stronger-than-expected earnings for last quarter and forecast increased profit and sales for this quarter, with US$0.80 earnings per share and sales of between US$27.4 billion and US$27.5 billion.

Comments by the world's largest PC maker about strong consumer demand and growth outside of the US market were seen as good news for Taiwanese laptop makers, especially Quanta and Compal, Citigroup's equity research team said in a note to investors on Tuesday.

But the ongoing US credit crunch and rising oil prices, which broke US$99 a barrel yesterday, cloud the outlook for local laptop makers ahead of the year-end holiday shopping season, Simon Yang (楊勝帆), a senior researcher at Taipei-based Topology Research Institute (拓墣產研), said in a telephone interview.

Yang said the growing demand in emerging markets may gradually substitute for the softened growth in the US market caused by subprime mortgage problems.

He said 67 percent of HP's revenue was generated by markets outside of the US, especially from the so-called BRIC countries: Brazil, Russia, India and China.

Still, the higher oil prices and US credit turmoil is going to hurt overall consumer demand at the retail end this month and next, he said.

For notebook computers, consumer demand is expected to rise 10 percent this quarter from last quarter, compared to an increase of 12 percent to 15 percent in the past, he said.

In related developments, the value of notebook computer production and shipments by Taiwanese manufacturers is expected to top US$40 billion this year, an Institute for Information Industry (資策會) analyst said yesterday.

Shen Chu-san (沈舉三), deputy director of the institute's Market Intelligence Center, said that Taiwan's computer hardware products, including notebooks, desktops, motherboards, servers and liquid-crystal-displays, had performed excellently in the first half of this year.

The value of notebook production and shipments amounted to approximately US$10 billion per quarter, with production and shipments expected to reach 86 million units worth more than US$40 billion for the whole year, Shen said.

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