Fri, May 30, 2008 - Page 12 News List

Asustek lowers shipment target for second quarter

By Lisa Wang  /  STAFF REPORTER

Asustek Computer Inc (華碩電腦) lowered its notebook computer shipment target yesterday for the second quarter, saying the ongoing subprime crisis and rising inflation had exacerbated already slowing demand in Europe and China.

The company’s gross margin may fall to around 15 percent in the second quarter because of stiffer price competition in the slow season, chief financial executive David Chang (張偉明) told reporters.

That would represent a 6.5 percentage point decline from the 21.5 percent Asustek posted in the first quarter.

“The company’s gross margin will be under higher pressure in the second quarter. To reach the shipment target, we have to adjust prices,” Chang said.

Asustek said it was also conservative about notebook shipments.

“In January, we thought it would be comfortable for us to increase laptop shipments 10 percent in the second quarter [over the first quarter],” Chang said.

“But, now, we think the growth will be between zero percent and 10 percent,” Chang said.

The subprime crisis, weakening global economy and inflation are taking their toll on consumer demand for electronics, Chang said.

More than 50 percent of the company’s NT$77.27 billion in first-quarter revenues came from the European market and 40 percent from Asia, the company’s financial statement said.

Asustek, however, has no plans to cut its full-year laptop shipment goal, he said.

Asustek, which produces the low-cost Eee PC series, aims to boost Asus-brand laptop shipments by 63 percent annually to 7 million units this year.

In a worst case scenario, it would still hope to ship 6.6 million units, Chang said.

The company expects to realize its target of shipping 1.3 million Eee PCs in the second quarter once constraints on battery supplies ease substantially next month, he said.

A battery shortage has restricted the expansion of the Eee PC models in Europe, the company said. The popular low-cost PCs are only available in certain European countries, including UK and France.

Asustek will retain the target of selling 5 million Eee PCs this year, Chang said. The company sold 700,000 units in the first quarter, mostly to Western Europe and emerging markets.

Encouraged by the success of the Eee PC series, Asustek is creating a sub-brand, “Eee,” with a broader product line that will include low-cost desktop computers with convenient user interface.

This year, sales of the new “Eee” brand may account for 20 percent of Asustek’s total revenues, with 10 percent coming from the Eee PC series, Chang said.

Asustek plans to showcase two next-generation Eee PC laptops outfitted with Intel Corp’s latest Atom chipset and a bigger screen at the annual computer trade show Computex in Taipei next week.

Following suit, Asustek’s local competitors also plan to unveil low-cost laptops at Computex.

Acer Inc, BenQ Corp (明基) and First International Computer Inc (大眾電腦), as well as motherboard maker Micro-Star International Co (微星科技) and home appliances maker Sampo Corp (聲寶) plan to debut their low-cost laptops running Microsoft’s operating system, Microsoft said yesterday.

Sales of low-cost PCs are expected to reach around 15 million units this year around the globe, International Data Corp projected.

Additional reporting by Jerry Lin

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