Thu, Feb 26, 2009 - Page 12 News List

Netbooks could boost shipments 37%: Compal

By Elizabeth Tchii  /  STAFF REPORTER

Compal Electronics Inc (仁寶電腦), the world’s No. 2 laptop computer maker, said yesterday that it expects to increase its shipments by as much as 37 percent this year to 35 million units, helped by growing demand for low-cost netbooks and a possible recovery in demand later in the year.

Compal aims to ship between 32 million and 35 million notebooks to customers this year, compared with 25.5 million last year, the company told investors.

However, the robust shipment growth might not translate into increases in revenues, it said. Revenues may be flat, or drop by up to 3 percent this year from roughly NT$405 billion (US$11.7 billion) last year as it would ship more lower-priced netbooks this year, driving down the average selling price (ASP). In 2007, Compal made NT$427.61 billion in revenues.

“Looking at global economic numbers, the outlook is bad. But our notebook business is holding up because of netbooks. We’d like to maintain margins. It is a challenge to hold our margins steady like most original design manufacturers [ODMs] do,” Compal president Ray Chen (陳瑞聰) said.

Neihu-based Compal currently derives 25 percent of its revenues from netbooks and expected the share to increase this year.

Separately, Compal said LCD TV shipments may more than double to 4 million units this year from 1.9 million units last year.

Market researcher International Data Corp said that the ASP per unit at the nation’s top five notebook makers has already dropped to US$505 in the last quarter from the third quarter’s US$513, and will continue to decrease.

In a note to clients, Citigroup analyst Eve Jung (戎宜蘋) retained the firm’s bearish outlook on Taiwan’s notebook assemblers, including Compal, citing rising price pressure from money-losing global PC customers such as Dell Inc and Hewlett-Packard Co, and higher earnings downside risk on concern over end-demand.

Citigroup reiterated its “sell” ratings on Compal with a three-month price target of NT$18.65, but it had a “hold” on bigger rival Quanta Computer Inc (廣達).

As for recent last-minute rush orders, Chen said these were merely “a replenishment in low channel inventory across retail, regional and branded customers, rather than a full recovery.”

For the current quarter, the company forecast that notebook shipments would remain flat year-on-year at 5.8 million to 6.2 million units, but projected growth of 15 percent in the second quarter as channels continue to increase inventory at a normal level.

Worldwide this year, Compal expects notebook shipments, including netbooks, to total between 145 million and 150 million units including between 25 million and 30 million netbooks.

Compal posted earnings of NT$2.74 billion for the fourth quarter of last year, representing a decline of 21 percent from the third quarter and a decline of 34 percent from the same period of 2007.

Earnings per share came to NT$0.71 for the three months ending in December from the previous quarter’s NT$0.91, the company said.

Amid falling global demand, Compal’s fourth-quarter sales contracted 3 percent from the previous quarter to arrive at NT$106.85 billion.

For the full year, Compal’s sales slipped from 2007’s NT$427.61 billion to NT$404.99 billion last year, while net profit declined 8 percent to NT$12.64 billion last year.

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